Paul L. Caron

Monday, June 26, 2006

CBPP: New Estate Tax “Compromise” Even Costlier Than Previous One

Cbpp_2 The Center on Budget and Policy Priorities has released New Estate Tax “Compromise” Even Costlier Than Previous One:

  • The House proposal would increase deficits by more than three-quarters of a trillion dollars over its first full decade (2012-2021)
  • The proposal uses a gimmick — linking the estate tax rate to the capital gains rate — that allows it to be presented differently to groups on different sides of the estate tax debate
  • Under the proposal, the effective tax rate on estates would be less than one-third the top estate tax rate, and well below the capital gains rate
  • The House proposal costs much more than simply extending the estate tax at its 2009 levels primarily because it would give much larger tax cuts to estates worth more than $10 million
  • The Thomas proposal also would eliminate the estate tax deduction for state estate taxes

June 26, 2006 in Think Tank Reports | Permalink | Comments (0) | TrackBack (0)

Gazur on § 132 After 20 Years

Gazur_1Wayne M. Gazur (Colorado) has published Assessing Internal Revenue Code Section 132 After Twenty Years, 25 Va. Tax Rev. 977 (2006).  Here is the abstract:

In 1984, Congress enacted Internal Revenue Code § 132 to bring more certainty to the taxation of employee fringe benefits. This article examines the impact of the legislation from the standpoint of administrative pronouncements and taxpayer litigation. The article concludes that § 132 has produced little litigation, but primarily because it has played the role of increasing exclusions. It remains unclear whether §132 has also contained the growth of new forms of nonstatutory fringe benefits.

June 26, 2006 in Scholarship | Permalink | Comments (0) | TrackBack (0)

Sunday, June 25, 2006

Top 5 Tax Paper Downloads

Who Are the Luckiest (and Unluckiest) Tax Profs?

Interesting article in the Weekend Wall Street Journal:  Baseball Confronts The Luck Factor; Is That Team Good -- or Just Lucky? Using Research on Randomness That's Shaking Up Other Fields, Number-Crunchers Say They Can Answer the Question, by Russell Adams:

Even in the numbers-obsessed world of sports, baseball has stood out for its efforts to track all aspects of the game. Now its fanatic record-keepers are on a quest to quantify something seemingly beyond measurement: the ethereal quality of luck. They're using insights into randomness that are shaking up other fields, from cancer research to weapons testing -- and that may even help you pick a good mutual fund.

My beloved Red Sox dominate the luck rankings: according to the stats mavens, the team should be in third place rather than in first place, Willy Mo Pena and Trot Nixon are two of the AL's luckiest hitters, and Matt Clement is the unluckiest pitcher in the league (his ERA should be 4.04, not 6.61).  (Trevor Hoffman of my adopted Padres is the NL's luckiest pitcher, with an ERA of 1.38 rather than 2.84.)

With careers turning on editorial decisions by third-year law students, the Tax Prof world seems ripe for similar studies -- who are the luckiest (and unluckiest) Tax Profs?!?

June 25, 2006 in Tax Profs | Permalink | Comments (0) | TrackBack (0)

DOJ Asks Court to Hold ABA in Contempt for Violating Consent Degree in Law School Accreditation Process

Aba_logo_4 Doj_12The Department of Justice has announced that it filed a petition on Friday asking the U.S. District Court for the District of Columbia to hold the ABA in civil contempt for violating multiple provisions of the 1996 antitrust consent decree, which prohibited the ABA from misusing the law school accreditation process. The DOJ also filed a proposed order and a stipulation in which the ABA acknowledges the violations alleged in the Department's petition and agrees to reimburse the United States $185,000 in fees and costs incurred in the Department's investigation.

According to today's petition, and as acknowledged by the ABA, the ABA violated six structural and compliance provisions in the 1996 consent decree on one or more occasions. Those provisions included requirements that the ABA:

  • Annually certify to the court and the United States that it has complied with the terms of the final judgment;
  • Provide proposed changes to accreditation standards to the United States for review before such changes are acted on by the ABA's Council of the Section of Legal Education and Admissions to the Bar;
  • Provide briefings to certain ABA staff and volunteers concerning the meaning and requirements of the decree;
  • Obtain annual certifications from certain ABA staff and volunteers that they agree to abide by the decree and are not aware of any violations;
  • Ensure that no more than half of the membership of the ABA's Standards Review Committee be comprised of law school faculty; and
  • Include on the on-site evaluation teams, to the extent reasonably feasible, a university administrator who is not a law school dean or faculty member.

(Hat Tip:  Gail Heriot and Todd Zywicki.)

Update:  Press reports:

June 25, 2006 in Law School | Permalink | Comments (0) | TrackBack (0)

Bizarre "Personal Physical Injury" for § 104(a)(2) Purposes

For those looking for additional examples of what constitutes compensatory damages for "personal physical injuries" for purposes of the § 104(a)(2) exclusion, check out this bizarre case out of Rhode Island.  (Hat Tip:  Dan Solove,)

June 25, 2006 in Teaching | Permalink | Comments (0) | TrackBack (1)

IRS v. Youth Soccer

Irs_logo_272 SoccerInteresting New York Times article today about how the IRS has assessed over $330,000 in taxes, interest, and penalties against a Connecticut volunteer youth soccer association for failing to withhold taxes from payments to its coaches and referees because they treated them as independent contractors rather than as employees:

[M]any of the referees in the Fairfield case are older children officiating at the games of younger ones, for $20 to $40 a game. "Are these 10-year-old children employees of Fairfield soccer?"

June 25, 2006 in IRS News | Permalink | Comments (0) | TrackBack (0)

Saturday, June 24, 2006

Happy 16th Birthday, Reed

Dad_and_reed_at_jh_ranchReed, 16 years ago today you entered this world, enriching our lives beyond measure. The years have flown by, and my heart aches that we will never again play soccer in the basement, shoot baskets in the driveway, or hit baseballs in the park.  But the void is filled with a different kind of joy, as I watch you develop into a remarkable young man.  Although I am bursting with pride at your many academic and athletic accomplishments, I am prouder still of simply who you are and the person you are becoming.

I have made more than my share of mistakes through these 16 years and in many ways have not been as good a father as you deserved.  But I want you to know that I love you and will be cherishing every day of these next three years before you leave our home to make your way in the world. I am especially looking forward to your arrival in San Diego today and to spending the next three weeks with you enjoying life in Southern California, until your mother and sister join us for the final two weeks before we all return to Cincinnati.

You are my Son, whom I love; with you I am well pleased.

June 24, 2006 in Miscellaneous | Permalink | Comments (2) | TrackBack (0)

Bell on the U.S. News Law School Rankings: Why Is Florida #41 Rather Than #43?

Spotlight_1_1William H. Lyons (Nebraska)

        • B.A. 1969, Colby College
        • J.D. 1973, Boston College



Lyons_2I joined the faculty of the University of Nebraska College of Law in 1981. My path to law school teaching was somewhat different than the traditional path of working for a large firm in a large metropolitan area for a few years with, perhaps, an additional year or two as a judicial clerk. I practiced in Bangor, Maine with the law firm of Vafiades, Brountas & Kominsky, where I was one of seven lawyers. I stayed at the firm for eight years, the last two years as a partner. I owe a great debt to my former partner, Nick Brountas, a wonderful mentor who should have been a law school professor.

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June 24, 2006 in Tax Prof Spotlight | Permalink | Comments (0) | TrackBack (0)

L.A. Civil Rights Attorney Yagman Indicted for Tax Evasion

Yagman_1 Prominent Los Angeles civil rights attorney Stephen Yagman was indicted on charges of trying to evade paying more than $100,000 in federal income taxes, as well as fraud and money laundering charges:

The indictment alleged Yagman filed federal income tax returns for 1994 through 1997 but paid only a small amount to the IRS. By not paying the full amount, he owed nearly $160,000 because of interest and penalties, according to the government. He also failed to pay significant amounts of federal payroll taxes owed by Yagman & Yagman P.C., which was his law firm at the time, the indictment said....

"He is one of the few people ever charged with not paying all of the tax he correctly declared on his returns," Yagman's attorney, Barry Tarlow, said in a statement. "A comprehensive defense investigation demonstrated that Stephen Yagman is an innocent man wrongly accused."  Yagman's attorney accused the government of waging a political prosecution against someone who has repeatedly fought abuse by the government....

Loyola Law School professor Laurie Levenson said Yagman "painted a target on himself by the nature of his practice and the manner in which he practiced: extremely aggressive, very personal, enjoying the fight. Now he is on the opposite end of it."

Press reports:

June 24, 2006 in News | Permalink | Comments (0) | TrackBack (1)

Gans & Leigh on Toying with Death and Taxes: Some Lessons from Down Under

Joshua S. Gans (Melbourne Business School, University of Melbourne) & Andrew Leigh (Australian National University ) have published Toying with Death and Taxes: Some Lessons from Down Under, The Economists' Voice: Vol. 3: Iss. 6, Article 9.  Here is the abstract:

Economists think many (most?) things are subject to incentives. The evidence from down under suggests that even the timing of death could vary with a repeal of estate taxes.


June 24, 2006 in Scholarship | Permalink | Comments (0) | TrackBack (0)

Burke & McCouch on Lipstick, Light Beer, and Backloaded Savings Accounts


BurkeKaren C. Burke (San Diego) & Grayson M.P. McCouch (San Diego) have published Lipstick, Light Beer, and Backloaded Savings Accounts, 25 Va. Tax Rev. 1101 (2006).  Here is the abstract:

The article addresses current proposals for expanding tax-preferred individual savings accounts and their implications for retirement security and tax policy. The authors argue that the yield-exempt approach embraced by the Administration in its proposals is likely to generate enormous long-term revenue losses, exacerbate inequalities in income and wealth, and erode broad-based coverage under employer-sponsored retirement plans. In addition to these fiscal and distributional concerns, they conclude that the proposals pose a serious obstacle to fundamental tax reform.

June 24, 2006 in Scholarship | Permalink | Comments (0) | TrackBack (0)

Bell on the U.S. News Law School Rankings: Baylor & U.S. News Respond to Data Mix-up

Tom Bell continues his series on the U.S. News & World Report Law School Rankings with a post on USN&WR and Baylor on that School's Data:

[T]he questionnaire that USN&WR sent to law schools in the fall of 2005 evidently asked them to report the median LSAT and GPA of their entire first-year class. Based on results from my model of the rankings, I surmised that USN&WR had somehow instead ranked Baylor based on the (rather higher) median LSAT and GPA of only those Baylor students who matriculated in the fall of 2005. In pursuit of more than mere guesses, I made inquiries to USN&WR and Baylor. I here offer their responses, to-date.

Prior posts in Tom's series:

June 24, 2006 in Law School | Permalink | Comments (0) | TrackBack (0)

Friday, June 23, 2006

The Economist on Treasury Secretary Paulson's Use of § 1043

We previously blogged the story of how § 1043 will save Treasury Secretary Paulson $48 million in taxes.  The Economist has more details in Riddle Solved; Why It Pays to Become America's Treasury Secretary.  (Hat Tip:  Calvin Johnson.)

June 23, 2006 in News | Permalink | Comments (0) | TrackBack (0)

Kaplow on Capital Levies and Transition to a Consumption Tax

Kaplow_1 Ssrn_84 Louis Kaplow (Harvard) has posted Capital Levies and Transition to a Consumption Tax on SSRN. Here is the abstract:

The merits of capital levies depend on the likelihood of repetition, the extent of anticipation, and its effects on distribution. The relevance of these features, which in varying degrees is underdeveloped or underappreciated in pertinent literatures, is elaborated and then considered with regard to the problem of transition to a consumption tax. Other transition issues are distinguished, and specific attention is devoted to rate changes under a consumption tax and whether owners of preexisting capital are effectively compensated through higher net-of-tax returns due to repeal of the income tax. The analysis is also related to literature that examines dynamic models of taxation, particularly work simulating consumption tax transitions and assessing the optimality of capital taxation in the long run.

June 23, 2006 in Scholarship | Permalink | Comments (0) | TrackBack (0)

Schlunk on A Lifetime Income Tax

Schlunk_2Herwig J. Schlunk (Vanderbilt) has published A Lifetime Income Tax, 25 Va. Tax Rev. 939 (2006).  Here is the abstract:

Under current tax law, there can be considerable period-by-period divergence between a taxpayer's after-tax income and her desired or actual consumption. This divergence will cause the taxpayer to borrow. One can view such borrowing either as being incurred to fund consumption, or as being incurred to fund the taxpayer's income tax payments. If one takes the latter view, one can ask whether a good income tax law should force a taxpayer to borrow to pay her taxes. I answer the question in the negative, and propose a lifetime income tax that would eliminate the need for typical taxpayers to borrow to pay their income tax liabilities. Under such a regime, a typical taxpayer would reap an affirmative benefit over her lifetime, because she would be able to transfer borrowing from herself (a relatively inefficient borrower) to the government (a relatively efficient borrower).

June 23, 2006 in Scholarship | Permalink | Comments (1) | TrackBack (0)

WSJ: Don't Go to Law School

Interesting article in today's Wall Street Journal:  Law School by Default; Want to Keep Your Options Open? Don't Train to be a Lawyer, by Cameron Stracher:

They're dropping like flies. Count 'em. Despite the swelling ranks of the new recruits, the steady growth in large corporate firms, and the length, breadth and expense of lawsuits, the legal profession is actually losing lawyers every day, a silent drain of talent to banking, business and premature retirement. Every year, I face a new class of eager law students, ready to take on the world, but after a couple of years of practice, many have lost their youthful glow. Perhaps it's time to rethink the whole "law school as default" mentality that infects so many otherwise sane young minds....

The legal profession is really two professions: the elite lawyers and everyone else. Most of the former start out at big law firms. Many of the latter never find gainful legal employment. Instead, they work at jobs that might be characterized as "quasi-legal": paralegals, clerks, administrators, doing work for which they probably never needed a J.D.

It's time those of us inside the profession did a better job of telling others outside the profession that most of us don't earn $160,000 a year, that we can't afford expensive suits, flashy cars, sexy apartments. We don't lunch with rock stars or produce movies. Every year I'm surprised by the number of my students who think a J.D. degree is a ticket to fame, fortune and the envy of one's peers--a sure ticket to the upper middle class. Even for the select few for whom it is, not many last long enough at their law firms to really enjoy it.

There's something wrong with a system that makes a whole lot of people pay a whole lot of money for jobs that are not worth it, or that have no future. If we wanted to be honest, we would inform students that law school doesn't keep their options open. Instead, we should say that if they work hard and do well, they can become lawyers.

For an extended discussion, with numerous reader comments, see the WSJ's Law Blog:  Law School: Does It “Keep Your Options Open”?

June 23, 2006 in Law School | Permalink | Comments (2) | TrackBack (0)

More Estate Tax News

More coverage of yesterday's passage by the House of H.R. 5638, The Permanent Estate Tax Relief Act of 2006:

June 23, 2006 in News | Permalink | Comments (0) | TrackBack (1)

Ainsworth on The Digital VAT (D-VAT)

Richard T. Ainsworth (Taxware LP & adjunct professor, Boston University; former deputy director, International Tax Program, Harvard) has published The Digital VAT (D-VAT), 25 Va. Tax Rev. 875 (2006). Here is the Conclusion:

This proposal for the U.S. adoption of a D-VAT is intended as an administrative supplement to proposals for a European-style, destination-based, credit-invoice VAT. As drafted, it is not concerned with achieving revenue neutrality, a concern of the President's Advisory Panel on Federal Tax Reform, nor is it concerned with the issue of revenue generation sufficient to allow the replacement of all or part of the federal income tax system, as has been a staple argument in the consumption tax debate over the past decades. This proposal for a D-VAT does not disagree with the VAT proposals advanced by Professors Graetz and Avi-Yonah, or with those proposed in Congress by Senator Hollings. What it does suggest is that if the United States is contemplating going in the direction of a national consumption tax, and if that direction is for a VAT, then the administrative design should be an intensely digital one. This article has set out the efficiency, equity, state-federal harmonization, and tax administrability reasons for the adoption of a D-VAT.

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June 23, 2006 in Scholarship | Permalink | Comments (0) | TrackBack (0)

Thursday, June 22, 2006

Bell on the U.S. News Law School Rankings: LSAT and GPA Rankings

Tom Bell continues his series on the U.S. News & World Report Law School Rankings with a post on What USN&WR Asks About Law Schools' LSATs and GPAs:

USN&WR's questionnaire expressly references the ABA's. With regard to LSATs and GPAs as with regard to many other item of information, USN&WR asks law schools to tell it the same thing they told the ABA. Note next how carefully USN&WR's questionnaire defines the time span under consideration: all students matriculating from 10/1/2004 through 9/30/2005. USN&WR quite evidently does not want a school to report only the LSATs and GPAs of students matriculating in the fall.

I imagine my readers can decipher texts at least as well as I can, so I leave each of you to figure out whether any law school could in good faith reply to USN&WR's 2005 questionnaire by submitting only the median LSATs and GPAs of students the school matriculated in the fall of 2005. Don't prejudge Baylor, though. We don't yet know exactly what that school reported to USN&WR, much less why it did so. As I said, I think we will soon get Baylor's own account—and, I hope, some clarity about how the USN&WR rankings actually do, or ideally should, work.

Prior posts in Tom's series:

June 22, 2006 in Law School | Permalink | Comments (0) | TrackBack (0)

House Approves Estate Tax Cut, 269-156

WSJ: IRS Revamps Its Whistle-Blower Program

Interesting article in today's Wall Street Journal:  IRS Reworks Its Whistle-Blower Program; Tax Agency Is Criticized For Inconsistency in Paying Rewards, Lax Management, by Tom Herman:

Facing new criticism, the IRS is revamping its program of rewarding people who turn in their friends, ex-spouses and colleagues for tax cheating. A new Treasury report (The Informants’ Rewards Program Needs More Centralized Management Oversight) praises the Informants' Claims for Reward Program for bringing in large amounts of money for little cost, but says the IRS needs to do a better job of managing the program efficiently and fairly. The IRS says it agrees with the recommendations and has already begun making changes. The program has brought in $340.3 million in just the past five years, according to the report by the Treasury Inspector General for Tax Administration. Since the late 1960s, the program has recovered nearly $3 billion.

June 22, 2006 in News | Permalink | Comments (0) | TrackBack (0)

Now on The "Bidding War" to Attract Foreign Direct Investment

Avi Now (Ernst & Young, Israel) has published The "Bidding War" to Attract Foreign Direct Investment: The Need for a Global Solution, 25 Va. Tax Rev. 835 (2006).  Here is the abstract:

It is a widely accepted practice by governments to grant tax incentives to entice and retain foreign direct investment (FDI). Since many countries seek to attract FDI, an "incentive competition" or "bidding war" between countries takes place, whereby some countries attempt to offer foreign investors the most favorable inducements. According to my analysis, there is a need for a viable and robust global regime to constrain FDI competition. Global governance of FDI competition could serve as a tool to constrain the decision-making discretion of national governments and make them less vulnerable to lobbying by special interest groups. I argue that global governance in this field functions as a "Political Constraint Tool" similar to World Trade Organization (WTO) tariff constraints to help avoid excessive responsiveness to lobbying by interest groups. I further argue that the global regime should follow a "hard law," rather than a "soft law," approach, and that in general there should be no distinction between developed and developing countries.

June 22, 2006 in Scholarship | Permalink | Comments (0) | TrackBack (0)

WSJ: The Best States for Family Trusts

Interesting article in today's Wall Street Journal:  States Court Family-Trust Business; Legislatures Race to Add Incentives to Capitalize On Growing Interest in Protecting Assets for Heirs, by Rachel Emma Silverman:

States are competing for a piece of the booming personal-trust business, and that's encouraging wealthy individuals interested in passing assets to their heirs to shop around for the most favorable state trust laws. A growing number of states have been revising their trust codes in recent years to add features, some of which were previously available only in exotic offshore locales. In some states, trusts are exempt from state income taxes, allowing the assets to grow state-tax free for years. Elsewhere, trust laws are designed to protect your assets from creditors and lawsuits....

In general, trust experts say that Delaware, South Dakota, Alaska and Nevada have the most attractive trust laws, while Florida and Wyoming are also good places to park a trust. New Hampshire, as the latest entrant to the trust race, is also a strong contender. One unusual feature in that state: Trustees have substantial protection from being sued by beneficiaries for not diversifying trust assets, says John P.C. Duncan, a Chicago lawyer who helped draft the New Hampshire law.


[Click on chart to enlarge.]

Update:  We previously have blogged Robert H. Sitkoff & Max Schanzenbach, Jurisdictional Competition for Trust Funds: An Empirical Analysis of Perpetuities and Taxes, 115 Yale L.J. 356 (2005).  Larry Ribstein has more here.

June 22, 2006 in News | Permalink | Comments (0) | TrackBack (0)

House to Vote Today on Estate Tax Compromise

House_5 The House is scheduled to vote later today on H.R. 5638, The Permanent Estate Tax Relief Act of 2006:

June 22, 2006 in News | Permalink | Comments (0) | TrackBack (1)

Geier on The Taxation of Income Available for Discretionary Use

Geier_2 Ssrn_70 Deborah A. Geier (Cleveland State) has published The Taxation of Income Available for Discretionary Use, 25 Va. Tax Rev. 765 (2006).  Here is the abstract:

The signature tax policy tension of the last two decades (at least) has been whether the federal tax base ought to reach income or only consumption. At the individual level, the current Internal Revenue Code (payroll taxes aside) incorporates an income tax base with numerous consumption tax components - provisions that allow either immediate deduction of a non-consumption capital expenditure (as under a cash-flow consumption tax), such as qualified pension plan and IRA savings, or exclusion of the returns to capital (as under a wage tax), such as the exclusion for home sale gain and Section 103 interest. (A more subtle wage tax feature is the reduced tax rate, at the individual level, of most capital gain and dividend income; a pure wage tax would apply a zero rate.)

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June 22, 2006 in Scholarship | Permalink | Comments (0) | TrackBack (0)

House Holds Hearing Today on The Impact of International Tax Reform on U.S. Competitiveness

House_2 The Subcommittee on Select Revenue Measures of the House Ways and Means Committee hosts a hearing today on The Impact of International Tax Reform on U.S. Competitiveness:

In its November 2005 report, the President’s Advisory Panel on Federal Tax Reform criticized the current U.S. international tax system as one that “distorts business decisions, treats different multinationals differently, and encourages wasteful tax planning.” As a result, the Panel’s report contained a number of international tax reform proposals that are intended “to reduce economic distortions and improve the fairness of the U.S. international tax regime by creating a more level playing field that supports U.S. competitiveness.” Lawmakers, taxpayers, practitioners and academics have similarly criticized the U.S. international tax system and have also proposed reforms.

The purpose of this hearing is to understand how the current U.S. international tax system impacts the competitiveness of U.S. multinational corporations and to evaluate how this system can be reformed to enhance our competitiveness abroad and stimulate job creation at home.

The witnesses scheduled to testify are:

  • Panel #1:
    • R. Glenn Hubbard, Dean and Russell L. Carson Professor of Finance and Economics, Columbia Business School
    • James R. Hines Jr., Professor of Business Economics and Public Policy, University of Michigan
    • Craig R. Barrett, Chairman of the Board, Intel Corporation
  • Panel #2:
    • Michael J. Graetz, Justus S. Hotchkiss Professor of Law, Yale Law School
    • Paul W. Oosterhuis, Partner, Skadden, Arps, Slate, Meagher & Flom, New York
    • Stephen E. Shay, Partner, Ropes & Gray, Boston

The hearing will be held at at 10:00 a.m. in B-318, Rayburn House Office Building.

Bluebook_5 In connection with the hearing, the Joint Committee on Taxation has released The Impact of International Tax Reform: Background and Selected Issues Relating to U.S. International Tax Rules and the Competitiveness of U.S. Businesses (JCX-22-06):

This document, prepared by the staff of the Joint Committee on Taxation, provides general background on the U.S. international tax rules and certain other countries’ tax systems, and discusses selected issues relating to international tax reform and U.S. competitiveness.   

June 22, 2006 in Congressional News | Permalink | Comments (0) | TrackBack (0)

IRS Makes Three New Appointments

Irs_logo_268 The IRS yesterday announced three new appointments:

  • Frank Y. Ng, Deputy Commissioner, Large and Mid-Size Business (International) (IR-2006-099).  Ng formerly was Acting Director, International.
  • Christopher Wagner, Deputy Commissioner of the Tax Exempt and Government Entities (TE/GE) Division (IR-2006-100).  Wagner formerly was the Deputy National Taxpayer Advocate.
  • John Imhoff as the Deputy Chief, Criminal Investigation (CI) (IR-2006-101). Imhoff formerly was Director for Field Operations for the North Atlantic Area, headquartered in Philadelphia.

June 22, 2006 in IRS News | Permalink | Comments (0) | TrackBack (0)

Wednesday, June 21, 2006

Brown Delivers Frankel Lecture on Taking Grutter Seriously: Getting Beyond the Numbers

Brownda_2Tax Prof Dorothy Brown (Washington & Lee) delivered the Tenth Annual Frankel Lecture on Taking Grutter Seriously: Getting Beyond the Numbers at the University of Houston Law Center, recently published at 43 Hous. L. Rev. 1 (2006).  Here is part of the Conclusion:

So as I conclude this Address, I want to reach out to my colleagues in law teaching. I want to encourage you to take Grutter seriously--to take racial diversity and the law seriously. I want to encourage each of you to stretch the limits of your imagination. It will energize you as well as empower your students. Taking diversity seriously means you must take diversity seriously inside the classroom. I guarantee you, no two classes will ever be the same and your students will reap immeasurable benefits.


June 21, 2006 in Scholarship | Permalink | Comments (0) | TrackBack (0)

Accounting Professor Is Not Related to Genghis Khan

Genghis_khan Robinson_2 Despite initial press reports to the contrary (blogged here), the Miami Herald reports today that University of Miami accounting professor Tom Robinson is not in fact related to Genghis Khan:

A University of Miami accounting professor who garnered brief fame for his genetic link to Genghis Khan will have to put his dreams of marauding on hold. It now appears that Palmetto Bay resident Tom Robinson is not a genetic descendant of the 13th-century Mongolian warlord, he said Tuesday.

(Hat Tip:  Chronicle of Higher Education.)

June 21, 2006 in Celebrity Tax Lore | Permalink | Comments (0) | TrackBack (0)

More on Law School and Law Firm Affirmative Action

Interesting article in today's Inside Higher Ed:  New Arguments on Affirmative Action, by Scott Jaschik:

Two articles — one just published and one forthcoming — challenge some conventional wisdom about affirmative action in higher education. Early buzz suggests that the pieces may attract considerable attention and challenge both critics and defenders of affirmative action.

One article [Negative Action Versus Affirmative Action: Asian Pacific Americans Are Still Caught in the Crossfire, by William C. Kidder (UC-Davis)] — in the Michigan Journal of Race & Law — takes on the view that the primary beneficiaries of the end of affirmative action in college admissions would be Asian American applicants. The piece analyzes some of the same data that has been used to make that argument and says that what it really shows isn’t that affirmative action hurts Asian Americans but that “negative action” (in other words, discrimination) is placing a limit on the enrollments of Asian Americans.

The other article [The Racial Paradox of the Corporate Law Firm, by Richard H. Sander (UCLA)] [blogged here yesterday] — not yet available online or published — will appear in the North Carolina Law Review. This article examines the attrition of black lawyers from top law firms and links their departures to their poor grades in law school, which in turn the author has previously attributed to the use of affirmative action to admit minority law students who, on average, can’t compete at the same level with their white colleagues

June 21, 2006 in Law School | Permalink | Comments (1) | TrackBack (0)

Memorial Tributes to Edwin S. Cohen

Cohen_3We previously blogged (here, here, and here) the death earlier this year of Edwin S. Cohen, Undersecretary of the Treasury in the Nixon Administration and longtime tax professor at Virginia.  The Virginia Tax Review has published two memorial tributes:

June 21, 2006 in Obituaries | Permalink | Comments (0) | TrackBack (0)

Joint Tax Committee Releases Technical Explanation and Revenue Effects of H.R. 5638

Estate Tax Developments

Developments regarding H.R. 5638, The Permanent Estate Tax Relief Act of 2006 (blogged here), scheduled for a House vote tomorrow:

June 21, 2006 in News | Permalink | Comments (0) | TrackBack (1)

Hamill on Bush Tax Policies Violate Judeo-Christian Ethics

Hamill_5Susan Pace Hamill (Alabama) has published An Evaluation of Federal Tax Policy Based on Judeo-Christian Ethics, 25 Va. Tax Rev. 671 (2006).  Here is the abstract:

This article severely criticizes the Bush Administration's tax policies under the moral principles of Judeo-Christian ethics. I first document that Judeo-Christian ethics is the most relevant moral analysis for tax policy because almost 80% of Americans and well over 90% of the Congress, including President Bush, claim to adhere to the Christian or Jewish faiths. I also show that evaluating federal tax policy under Judeo-Christian principles not only passes constitutional muster but is also appropriate under the norms of a democracy. I then provide a complete theological framework that can be applied to any tax policy structure. Using sources that include leading Evangelical and other Protestant scholars, Papal Encyclicals and Jewish scholars, I prove that tax policy structures meeting the moral principles of Judeo-Christian ethics must raise adequate revenues that not only cover the needs of the minimum state but also ensure that all citizens have a reasonable opportunity to reach their potential. Among other things, reasonable opportunity requires adequate education, healthcare, job training and housing. Using these theological sources, I also establish that flat and consumption tax regimes which shift a large part of the burden to the middle classes are immoral. Consequently, Judeo-Christian based tax policy requires the tax burden to be allocated under a moderately progressive regime. I discuss the difficulties of defining that precisely and also conclude that confiscatory tax policy approaching a socialistic framework are also immoral. I then apply this Judeo-Christian ethical analysis to the first term Bush Administration's tax cuts and find those policies to be morally problematic. Using a wealth of sources, I then establish that the moral values driving the Bush Administration's tax policy decisions reflect objectivist ethics, a form of atheism that exalts individual property rights over all other moral considerations. Given the overwhelming adherence to Christianity and Judaism, I conclude that President Bush, many members of Congress and many Americans are not meeting the moral obligations of their faiths, and, I argue that tax policy must start reflecting genuine Judeo-Christian values if the country is to survive in the long run.

June 21, 2006 in Scholarship | Permalink | Comments (0) | TrackBack (0)

Joulfaian on Gift Taxes and Lifetime Transfers: Time Series Evidence

Ssrn_logo_149 David Joulfaian (Office of Tax Analysis, Treasury Department) has posted Gift Taxes and Lifetime Transfers: Time Series Evidence, 88 J. Pub. Econ. 1917 (2004), on SSRN.  Here is the abstract:

The tax treatment of lifetime transfers was altered on a number of occasions since the enactment of the gift tax six decades ago. Trends in gifts by the wealthy show a dramatic response to these changes. In this paper, I examine this trend and gauge its response to taxes, transitory and permanent, over a period of 65 years. The results suggest that gifts are highly elastic with respect to taxes, particularly in the short run. Tax minimization seems to be an important consideration in the timing of intergenerational transfers.

June 21, 2006 in Scholarship | Permalink | Comments (0) | TrackBack (0)

Tuesday, June 20, 2006

Tax Prof Spouse Swap?

Trading_2Interesting article in today's Inside Higher Ed:  Alternate Academic Reality, by Rob Capriccioso:

“The Seedy Side of Tweed: Professors Swap Wives.”

If Jerry Springer was in charge of casting a new reality program endeavor for FOX television, that could well be the title. He’s not, but Rocket Science Laboratories, the company behind many a reality show smash hit, including "Joe Millionaire," "Temptation Island" and "My Big Fat Obnoxious Fiancé," is taking on the task.

Last week, the company put out a call for new families to take part in Trading Spouses, a reality program on FOX entering its fourth season that features moms switching places with each other in their respective families each week. The point is to see how well they mesh in their new environments and confront unexpected challenges, according to the show’s creators. Moms are given $50,000 at the end of each episode to spend on items and services that they believe will improve their temporary family’s overall dynamic.

For one episode this year, Rocket Science Laboratories wants to feature two families in which one or both of the parents are professors. "Our show is about celebrating families from eclectic backgrounds," explains Brooke Krinsky, a casting associate with the company. “One reason we’re going after higher education professionals is that they tend to lead amazing lives and do amazing things.”

Yikes!  I agree with Law Prof Paul Steven Miller (Washington University):  "I''d have to check with my wife. I don’t want her to end up seeing that there’s a better life out there with some other academic."

June 20, 2006 in Celebrity Tax Lore, Law School, Tax Profs | Permalink | Comments (0) | TrackBack (0)

NY Times: Haas Accused of Tax Fraud

Interesting article in today's New York Times:  Executive Accused of Tax Fraud and Witness Intimidation, by David Cay Johnston:

The owner of the nation's largest computerized machine tool maker was arrested yesterday morning at his California home and charged with orchestrating a tax fraud that cost the government nearly $20 million as well as intimidating witnesses and a federal agent investigating the case.

Gene F. Haas, 54, of Camarillo, Calif., the owner of Haas Automation and other companies, was accused in a 52-page indictment of running a bogus invoicing scheme to create fake tax deductions. Mr. Haas was held without bail after his arraignment in Federal District Court in Los Angeles.

For further coverage, see:

June 20, 2006 in News | Permalink | Comments (0) | TrackBack (1)

Taylor: Racial Preferences Backfire in Large Law Firms

Interesting article in this week's National Journal:  How Racial Preferences Backfire, by Stuart Taylor Jr.:

Most -- if not all -- of the nation's leading law firms seek to become more diverse by using "very large hiring preferences" for African-Americans and smaller preferences for Hispanics. So most of their newly hired minority lawyers have relatively weak academic records that would have brought rejection had they been white.

But these preferences are at best a mixed blessing -- and are often a curse -- for their recipients. After a year or two on the job, most minority associates at big firms get less desirable assignments and less training than their white counterparts. Many become discouraged and embittered. Young black lawyers leave big firms "at two or three times the rate of whites."

These problems plague minority lawyers precisely because of the racial preferences that got most of them hired. By lowering the big firms' usual hiring standards, large preferences bring "disparities in expectations and performance that ultimately hurt the intended beneficiaries."

The article is based on Richard H. Sander's forthcoming article, The Racial Paradox of the Corporate Law Firm, 84 N.C. L. Rev. ___ (2006).

June 20, 2006 in Law School | Permalink | Comments (2) | TrackBack (0)

WSJ: Textron Battles DOJ on Access to Work Papers in SILO Tax Shelter Investigation

Interesting article in today's Wall Street Journal:  Tax Battle: IRS vs. Textron, by Jesse Drucker:

Textron Inc., an aerospace and defense contractor, is in an uphill legal battle with the Internal Revenue Service that could win U.S. corporations a significant new weapon in tax disputes. The conglomerate is resisting demands by the IRS for internal documents about its use of allegedly abusive tax shelters. Tax collectors have become more aggressive in recent years in demanding such records, and most companies comply. Textron is the first company that the federal government has taken to court over the issue, the IRS says. Legal experts say the IRS has the upper hand in the fight, but tax lawyers are watching to see if the case alters the balance of power in corporate tax disputes....

In 2001, Textron bought several telephone networks and a railroad system overseas and then leased them back to their owners, according to a Justice Department court filing. Such arrangements can produce big tax benefits because depreciation can be claimed on the assets to reduce taxable income.

Some leasing transactions that reduce taxes are legitimate, but the IRS has tried to crack down on aggressive ones it calls "sale in, lease out" deals. In 2004, Congress outlawed future so-called SILOs, and the IRS in 2005 said it would begin presuming that past SILO transactions violated tax laws. The IRS is currently trying to prove that assertion in cases involving Consolidated Edison Co. of New York Inc., BB&T Corp. and Fifth Third Bancorp, which in suits against the government contend their deductions were proper.

The IRS says Textron entered into several deals that were SILOs, or "substantially similar" to SILOs. Toward that end, last year it demanded copies of the company's "tax-accrual work papers" for 2001. Such documents generally include detailed analysis of tax-beneficial transactions that could be challenged by the IRS. If Textron thought there was a chance that the IRS would disallow a deduction, it would set aside -- or "accrue" -- a portion of the expected savings. The papers also could include analysis by lawyers of the transaction's legal weaknesses. Joseph Bankman, a Stanford University law professor who writes about tax shelters, calls such papers "the blueprint" for complicated tax transactions.

June 20, 2006 in News | Permalink | Comments (0) | TrackBack (0)

More on Civil Rights Commission's Hearing on Affirmative Action in Law Schools

More on the Civil Rights Commission's hearing last Friday on Affirmative Action in Law Schools (previously blogged here and here):

June 20, 2006 in Law School | Permalink | Comments (0) | TrackBack (0)

Tax Consequences of World Cup Office Parties


Interesting item on  World Cup Parties Score Tax Own Goal:

Workers enjoying World Cup parties put on by their employer could be hit with a nasty tax bill, according to Blick Rothenberg, a tax specialist firm based in London. Under income tax rules, employers who invite staff to social functions have to declare the hospitality to HM Customs & Revenue if the cost per worker amounts to more than £150 over the course of a year. While Christmas parties are generally exempt because it is unusual for employers to spend that much per head, Blick Rothenberg said the extra expense of World Cup hospitality could take some workers over the limit. If the hospitality for the year exceeds £150 staff would then [be] charged income tax at their highest marginal rate on the whole value, not just the excess. Employers have the option to take on the expense, but the firm said many may choose not to.

The Tax Foundation's Tax Policy Blog notes the U.S tax consequences of World Cup office parties:

Under the existing income tax system in most countries, including the United States, there are a myriad of ways in which employers compensate their employees so as to avoid income taxation. These benefits are often difficult to measure (and enforcing taxation of them is also difficult, even if they could be measured) and can range from plush offices with a great window view to the privelege of sitting in the company’s luxury box at local sporting events.

June 20, 2006 in Celebrity Tax Lore | Permalink | Comments (0) | TrackBack (1)

Ways & Means Chair Thomas Offers Estate Tax Compromise Bill

House_3 In an effort to spur estate tax reform in the Senate, House Ways & Means Committee Chair William M. Thomas (R-CA) yesterday introduced H.R. 5638, the Permanent Estate Tax Relief Act of 2006.  The bill would:

  • Reunify the estate, gift, and generation-skipping transfer taxes
  • Permanently raise the estate tax exemption level to $5 million, effective 2010
  • Estate two estate tax brackets:
    • Estates up to $25 million:  Capital gains rate (currently 15%, but scheduled to increase to 20% in 2011)
    • Estates over $25 million:  Twice the capital gains rate (currently 30%, but 40% in 2011 unless Congress acts to reduce the capital gains rate)
  • Allow a surviving spouse to carryforward any portion of the $5 million exemption not used by the deceased spouse
  • A new 60% deduction for qualified timber capital gains, from the date of enactment through 2010

For more information, see:

For press coverage, see:

June 20, 2006 in Congressional News | Permalink | Comments (0) | TrackBack (1)

Tax Relief for Hurricane Victims

Irs_logo_267 The IRS yesterday announced (IR-2006-096 & IR-2006-097) the release of three documents providing additional tax relief to victims of Hurricanes Katrina, Rita, and Wilma:

  • Notice 2006-56, 2006-28 I.R.B. ___ (July 10, 2006), provides a further extension of time (until October 16, 2006) for taxpayers to claim a casualty loss deduction.
  • Notice 2006-59, 2006-28 I.R.B. ___ (July 10, 2006), provides rules for employees to avoid tax on wage income when they deposit leave in an employer-sponsored leave bank for use by other employees who have been adversely affected by a major disaster.
  • Rev. Proc. 2006-32, 2006-28 I.R.B. ___ (July 10, 2006), provides safe harbors for individuals to use in determining the amount of their casualty and theft loss deductions for personal-use residential real property and personal belongings that were damaged, destroyed, or stolen in the hurricanes.

For further information, see Help for Hurricane Victims on the IRS's web site.

June 20, 2006 in IRS News | Permalink | Comments (0) | TrackBack (0)

Conference on Tax Shelters and FAS 109 in New York City

The Boston University Graduate Tax Program, Federal Bar Association, and Tax Review present a joint conference today on Tax Shelter Developments in the US, UK and France and FAS 109 Developments today in New York City:

Tax Shelters. The first topic is a high level panel overview of tax developments in the United States, the United Kingdom and France to identify and combat tax shelters. Speakers include the International Tax Counsel of the US Department of the Treasury, high ranking representatives from the Internal Revenue Service and Her Majesty’s Revenue and Customs, as well as eminent US, UK and French private practitioners.

FAS 109. The second topic is a review of developments in the FAS 109 area. In 2004, the Financial Accounting Standards Board began a project to clarify the criteria that must be met prior to recognition of the financial statement benefit of a position taken in a tax return for recognition of uncertain tax benefits in accordance with Financial Accounting Standard No. 109, “Accounting for Income Taxes.” Final guidance is anticipated to be issued later this year. Speakers include the National Head of Tax Accrual Services for Ernst & Young and other experienced professionals from the Government, professional services and law firms.

The conference will be held from 8:00 a.m. - 3:30 pm at Morrison & Foerster, 1290 Avenue of the Americas (6 th Avenue), New York City.

June 20, 2006 in Tax Conferences | Permalink | Comments (0) | TrackBack (0)

Debate Over ABA's Decision to Count Student's Highest LSAT Score, Rather Than Average Score from Multiple Tests

Following up on last week's post on the ABA's decision to require schools to report a student's highest LSAT score from multiple tests, rather than the average score:

Dan Solove (George Washington) applauds the change:

I think that this is a terrific policy change. I never understood the rationale for using the average score except to prevent people from taking the test too many times. But that's solved by the limit in the number of tests people can take. What this means is that students who have a bad day at the LSAT aren't forever held back by it in their careers. This is a welcome change.

Sam Stonefield (Western New England) opposes the change:

I oppose the change on the merits. However, what astonishes and depresses me more than the change itself is the shoddiness of the process that produced the change. Neither the ABA nor the LSAC ever presented any arguments or data in support of the change and both ignored the available data (from the LSAC’s own studies and the College Board, administrators of the SAT) that at the very least suggest considerable caution before adopting the change.

My argument, in a nutshell, is that the proposed change, while well-intended, will have predictable consequences of 1) increasing the number of repeat test takers, from the current 22% of all test-takers to the SAT average of 55%; 2) intensifying the already-excessive focus of law school admissions committees on the high LSAT score; and 3) furthering disadvantaging African-American and Hispanic applicants. Consequence #1 is not necessarily bad (it is certainly good for the revenue of the LSAC and test-preparation services), but the likely scale of the increase certainly cautions for study prior to adoption. Everyone agrees that both Consequences ## 2 and 3 are admittedly bad, and the only question is whether the change will produce those consequences. I would feel more sanguine about the ABA’s (implicit) dismissal of these consequences if their consideration of the change had been more careful and analytical.

June 20, 2006 in Law School | Permalink | Comments (2) | TrackBack (0)

Monday, June 19, 2006

ALI-ABA Hosts 42nd Annual Estate Planning in Depth Program This Week at Wisconsin

Aliaba_2 ALI-ABA hosts the five-day 42nd Annual Advanced ALI-ABA Summer Program on Estate Planning in Depth at the University of Wisconsin Law School this week.  Tax Prof speakers include:

  • Samuel A. Donaldson (Washington)
  • Jeffrey N. Pennell (Emory)

June 19, 2006 in Tax Conferences | Permalink | Comments (0) | TrackBack (0)

Joint Committee Releases Report on The Development of Macroeconomic Models for Use in Tax Policy Analysis

Bluebook_1 The Joint Committee on Taxation has released Exploring Issues In The Development of Macroeconomic Models for Use in Tax Policy Analysis (JCX-19-06):

The Brookings Institution and the Heritage Foundation invited the staff of the Joint Committee on Taxation to participate in a seminar on June 16, 2006, titled “A Seminar on Dynamic Analysis and a Discussion with the Current and Former Directors of the Congressional Budget Office.” The purpose of the seminar is to present to Congressional staff and other interested persons a discussion of developments in the use of macroeconomic models for the analysis of proposed changes in Federal tax policy.

This document reproduces the prepared remarks of the Joint Committee staff, in the order in which the remarks were delivered at the seminar. Part I of this document reports on work of the Joint Committee staff identifying the sensitivity of reported macroeconomic results to the type of model being used, assumptions about the sizes of behavioral responses and monetary and fiscal policy reactions, and simplifying assumptions with respect to the level of aggregation used in modeling changes in tax policy. This report demonstrates the importance of the level of disaggregation in the calculation of average and marginal tax rates to the outcome of macroeconomic models.

Part II of this document provides a brief history of Joint Committee staff efforts to estimate the macroeconomic effects of tax proposals. It also presents some recent model developments and describes some future developments under consideration by the Joint Committee staff.

June 19, 2006 in Gov't Reports | Permalink | Comments (0) | TrackBack (0)