Friday, January 26, 2007
Yoram Margalioth (Tel Aviv University Law School) presented Not a Panacea for Economic Growth: The Case for Accelerated Depreciation at UCLA yesterday as part of its Tax Policy and Public Finance Workshop Series, Here is part of the Introduction:
Accelerated depreciation deductions have been a tenet of US tax policy for the past 50 years. They are widely believed to promote economic growth.1 In this paper, I argue that accelerated depreciation is based on a questionable economic growth theory and suggest switching to a depreciation method that is closer to economic depreciation. This may allow lowering tax rates or increasing tax incentives to research and development -- the real engine of economic growth.
Mitchell Kane (Virginia) has published Ownership Neutrality, Ownership Distortions, and International Tax Welfare Benchmarks, 26 Va. Tax Rev. 53 (2006). Here is the abstract:
The literature analyzing the efficiency consequences of international tax policy has for many years emphasized the impact of a nation's tax laws on the location of capital (either in saving or in investment). By contrast, Mihir Desai and James Hines have recently suggested that policy analysis should take greater account of the efficiency consequences of ownership. Desai and Hines have put forward capital ownership neutrality (CON), as a benchmark that promotes global efficiency (from an ownership perspective), and national ownership neutrality (NON), as a benchmark that promotes national welfare (from an ownership perspective). This paper analyzes the empirical and theoretical arguments for adopting international tax welfare benchmarks that are keyed to ownership distortions. It concludes that existing empirical evidence does not provide a good indication of the magnitude of ownership distortions, as compared to locational distortions. The paper's chief theoretical contribution is to describe the many tax and non-tax features of the global economy that can lead to ownership distortions. Because distortions arise in many ways that have nothing to do with the manner of double tax relief, it is not possible to make theoretical efficiency claims (at either the global or national level) based merely on modification to methods of double tax relief. Thus CON and NON do not necessarily promote global and national welfare (from an ownership perspective). Ownership distortions should play an important role in the setting of international tax policy. Determining actual policy prescriptions, however, requires further theoretical and empirical investigation of the complicated interaction of locational and ownership distortions.
Thursday, January 25, 2007
Steven Dean (Brooklyn) presents Philosopher Kings and International Tax, 58 Hastings L.J. ___ (2007), at NYU today as part of its Colloquium on Tax Policy and Public Finance series. Here is the abstract:
Tax flight treaties could help to solve the $50 billion-a-year problem that tax flight (the evasion of income taxes through the use of offshore tax havens) poses for the United States. Tax flight treaties would offer tax havens a substantial portion of the increased tax revenues that they could generate by providing the United States with the enforcement assistance it needs. Those payments, potentially representing as much as half of the added tax revenue produced by tax flight treaties (and in all probability an amount that is greater than any GDP gains attributable to eliminating waste and other economic distortions related to tax flight), would give tax havens both the resources and the incentive they need to develop the administrative capacity necessary to supply the United States with income tax information. It is likely that those treaties would reduce the United States’ collective well-being (particularly if measured in simple GDP terms) by transferring wealth from U.S. tax cheats to the governments of tax havens. A simplistic “philosopher king” model of international tax law, the strong form of which assumes that governments engage in cross-border tax cooperation to boost their respective GDPs, would suggest that tax flight treaties could never be effective. However, the more sophisticated model of inter-governmental behavior developed by the international law scholar Oona Hathaway, her “integrated theory,” supports a more optimistic conclusion regarding the potential of tax flight treaties.
Joel Slemrod (Ross School of Business, University of Michigan) presents Show Me the Money: The Economics of Tax Remittance at Penn today as part of its Tax Policy Workshop Series. Here is the beginning of the Introduction:
Nearly all of the modern economic theory of taxation is concerned with what actions or states of affairs trigger tax liability, and virtually none is concerned with who or what entity remits funds to the government to cover that liability. Indeed, both elementary public finance textbooks and advanced surveys suggest that the remittance responsibility—such as whether the buyer or seller of a commodity must remit any sales tax triggered by the sale—is irrelevant to the consequences of a tax.
The BNA Tax Management Advisory Board meets today at 5:30 pm (followed by a reception at 7:00 p.m.) at the Waldorf-Astoria Hotel in New York City to discuss three corporate tax papers:
- Recent Administrative Developments in the Tax Shelter Arena, by Jeffrey Paravano (Baker & Hostetler, Cleveland, OH)
- Translating FIN 48 for Non-CPAs, by Steven R. Schneider (Miller & Chevalier, Washington, D.C.)
- Fixing § 470 for Pass-Through Entities: A Different Approach, by Aaron Nocjar (Steptoe & Johnson, Washington, D.C.)
I don't think the legal academy adequately appreciates the implications of all this well-documented gaming. Not only are we cutting corners writ large in order to get ahead -- and hence have zero credibility to emphasize the importance of honest, integrity, and ethical behavior in the practice of law -- but we providing overwhelming evidence that we are incapable of effective self-regulation. Calling U.S. News a collective action problem is a cop-out. Where is the ABA, our accrediting agency, to police this behavior? ...
The biggest red flag is that while total employment at 9 months for all law school graduates surged from 83.9% to 91.6% between 1997 and 2006, first-time bar passage for this same cohort dropped from 83.0% to 78.6%, presumably due to the trend toward higher bar cut scores.
Interesting story in The Press: Charity Donor Driven Away, by David King & John Henzell:
New Zealand's richest woman quit the country after the Government refused to relax tax rules to help her give away a big part of her fortune to charity.
(Hat Tip: John Domaschko.)
Stanford and Yale Law Schools have issued a call for tax papers for the eighth annual Stanford/Yale Junior Faculty Forum to be held at Stanford Law School on May 18-19, 2007:
The Forum's objective is to encourage the work of young scholars by providing experience in the pursuit of scholarship and the nature of the scholarly exchange. Meetings are held each spring, at Yale one year and Stanford the next.
Approximately twelve scholars (with one to seven years in teaching and who are not yet tenured) will be chosen on a blind basis from among those submitting papers to present. Two senior scholars, not necessarily from Stanford or Yale, will comment on each paper. The audience will include the invited young scholars, faculty from the host institutions, and invited guests. The goal is discourse on both the merits of particular papers and on appropriate methodologies for doing work in that genre. We hope that comment and discussion will communicate what counts as good work among successful senior scholars and will also challenge and improve the standards that now obtain. The Forum also hopes to increase the sense of community among American legal scholars generally, particularly among new and veteran professors.
Each year the Forum invites submissions on selected topics in public and private law, legal philosophy, and law and humanities -- alternating loosely between public law and humanities subjects in one year, and private and dispute resolution law in the next. For the May, 2007meeting, the topics will cover private law and dispute resolution and includes tax.
There is no publication commitment associated with the Forum, nor is published work eligible. Yale or Stanford will pay presenters' travel expenses, who will be required to attend the entire Forum schedule. Paper submissions for the Forum should be sent to Judy Dearing at Stanford Law School by February 15, 2007. For further information, contact Ronald Gilson (Stanford) or Alan Schwartz (Yale).
Tax papers selected for the Forum in prior years include:
- The Shareholder-Based Origins of the Corporate Income Tax, by Steven A. Bank (UCLA)
- Perception and Income: The Behavioral Economics of the Realization Doctrine, by Terrence R. Chorvat (George Mason)
- The Role of Taxes in Restructuring Financially Distressed Firms, by Lorie Johnson (Georgia)
- Deputizing the Gunslingers: Co-opting the Tax Bar Into Dissuading Corporate Tax Shelters, by Richard Lavoie (Akron)
- The Cary Brown Theorem and the Income Taxation of Risk: A Reappraisal, by Ethan Yale (Georgetown)
Bradley T. Borden (Washburn) has posted two of his older tax papers on SSRN:
- From the Ground Up: An In-Depth Analysis of Build-to-Suit and Related Party Exchanges, 44 Tax Mgmt. Mem. 19 (2003)
- What You Should Know About Mergers and Divisions of Partnerships, 17 Pract. Tax Law. 45 (2003)
Wednesday, January 24, 2007
The IRS announced today (IR-2007-15) that tax returns will be due on April 17 this year, because April 15 is a Sunday and April 16 is a holiday in the District of Columbia (Emancipation Day). More more details, see Questions and Answers - April 17 Deadline.
Press and blogosphere coverage:
The White House today released further details about the standard deduction for health care proposed by the President in last night's State of the Union Address.
The Collaborative on Academic Careers in Higher Education at Harvard yesterday released Top Academic Workplaces (2005-06). From the press release:
While the majority of junior faculty at America's colleges and universities are satisfied at work, some institutions are doing extraordinarily well in this area. The survey, administered by the Collaborative on Academic Careers in Higher Education (COACHE) in 2005, determined that some colleges and universities are "exemplary" on certain key dimensions of faculty work life....
In order to qualify as an "exemplar," a college or university needed scores that were notably higher than similar institutions. Five universities (Auburn, Brown, Ohio State, Stanford, and the University of Illinois at Urbana-Champaign) and one college (Davidson) achieved exemplary status in four of seven categories. Two universities (Dartmouth and the University of Virginia) and two colleges (Goucher and Kenyon) were outstanding in three categories. Two universities (Harvard and University of Kansas) and four colleges (Denison, Hamilton, Macalester, Wabash) were exemplary in two categories. The survey considered the following categories in assessment::
- tenure, clarity and fairness
- nature of work: workload, research and teaching environment, quality of students;
- effectiveness of key policies (e.g., mentoring, childcare, and leaves)
- work and family balance
- overall satisfaction
Press and blogospshere coverage:
During a divorce, the marital assets are divided between the parties. There are tax issues relating to the division of assets. This session will cover the following:
- Valuation issues in a closely held business
- Tax issues relating to the asset division
- Allocation of carryover tax attributes to include net operating losses, capital losses, passive losses
- Alimony versus property settlements -- excess front loading
- Home ownership and marital residence issues
- Promissory notes in an asset division
- Latest trend in splitting retirement plans
- Section 529 Plan issues
- IRS notice and recordkeeping requirements
- Christina E. Hilton (Picerelli, Gilstein & Company)
- Patricia A. Thompson (Picerelli, Gilstein & Company)
Congratulations to the winners of the ABA Tax Section's 2006 Law Student Tax Challenge:
- 1st Place: Michigan State
- Students: Jason Frederick Maus & Julie Ann Camden
- Faculty Coach: Michele LaForest Halloran
- 2nd Place: Virginia
- Students: Sarah L. Pendergraft & Jason McIntosh
- Faculty Coach: Michael Doran
- 3rd Place: Northern Illinois
- Students: Jody Beilke & Martha Krohe
- Faculty Coach: Dan Schneider
- Best Written Submission & Semi-Finalist: Santa Clara
- Students: Joseph A. Myska & Bonnie J. Wright
- Faculty Coach: Jack Bogdanski
- Other Semi-Finalists:
- Western New England
- Students: Matthew Kelley & Vikram Purewal
- Faculty Coach: Fred Royal
- Students: Mark Hammond & Kathryn Walker
- Faculty Coach: Joseph Shoe
- Western New England
- 1st Place & Best Written Submission: Loyola-L.A
- Students: Matt McNeill & Stacey Olson
- Faculty Coach: Jennifer Kowal
- 2nd Place: Georgetown
- Students: Megan Stombock & James Saling
- Other Finalists:
- Golden Gate
- Students: Emerson DuBois & Alex Pederson
- Faculty Coach: Kimberly Stanley
- Students: Steven Chung & Melissa Davis
- Faculty Coach: Dean Weiner
- Golden Gate
Perspectives on the tax portions of President Bush's State of the Union Address last night:
- Cato Institute
- Center on Budget and Policy Priorities
- Don't Mess with Taxes
- New York Times
- Roth & Co.
- Tax Foundation
- Tax Policy Center
- Wall Street Journal
- Washington Post
The Senate Budget Committee held a hearing yesterday on The Growing Tax Gap and Strategies for Reducing It. Here are the witness statements from:
- Robert S. McIntyre (Director, Citizens for Tax Justice)
- Michael Brostek (Director of Tax Issues, Government Accountability Office)
- John Satagaj (Small Business Legislative Counsel, Small Business Tax Compliance & Fairness Coalition)
To watch the webcast of the hearing, see here.
Douglas A. Kahn (Michigan) & Jeffrey H. Kahn (Penn State) have published Prevention of Double Deductions of a Single Loss: Solutions in Search of a Problem, 25 Va. Tax Rev. 1 (2006). Here is the abstract:
Congress has enacted several nonrecognition corporate provisions where changes are made to the form of ownership and where forcing the recognition of income could prevent those changes from taking place even though they would provide a more efficient and economically beneficial structure. One such provision is § 351 which provides nonrecognition treatment to shareholders who contribute property to a controlled corporation in exchange for corporate stock. When § 351 applies, the shareholder’s basis in the corporate stock received and the corporation’s basis in the contributed property are calculated to carry forward any realized but unrecognized gains or losses (subject to certain exceptions described in this article).
Tuesday, January 23, 2007
Interesting article in today's Daily Business Review: After the Backdating Investigation, Don't Forget About the Taxes, by Tracy Nichols:
You thought the misery was over when the hordes of lawyers and accountants cleared out after completing the option backdating investigation into your company's options grant practices for the last 10 years. ...
Since the Securities and Exchange Commission has publicly stated that it is sharing the results of its investigations with the Department of Justice and the Internal Revenue Service, it is probably advisable to unravel the tax issues -- just as you did with the accounting and legal issues previously.
There are a variety of tax issues for companies and employees alike. These issues apply regardless of whether the options were the product of nefarious backdating -- for example, intentionally altering the grant date of an option to a time when the stock price was lower than the actual grant date -- or just innocent misdating. For example, you tried to get the date right but the necessary corporate actions did not occur until several weeks later when the price was, unfortunately, higher.
The Senate Finance Committee has released additional legislative documents on S. 349, The Small Business and Work Opportunity Act of 2007, unanimously approved by the committee last week
- Legislative Text
- Committee Report
- Estimated Revenue Effects
- Staff Summary
- Revised Joint Committee Summary
- Revised Joint Commitee Revenue Estimate
Our prior coverage (see below) of the tax consequences to recipeints of home renovations through the TV show Extreme Makeover -- Home Edition have forcused on the federal income tax consequences. Current news reports discuss the state and local property tax consequences:
- Dream Home Brings a Big Tax Hike; Legislation Seeks Help for "Makeover" Families, Detroit Free Press
- Extreme Tax Bill: Family Gets Its Dream Home -- And a Big Problem, Too; New Jersey Legislators Are Considering Changes in the Tax Laws, The Record
- Family Needs Tax Miracle, NorthJersey.com
- Makeover Family Can't Afford Taxes on New Home, NorthJersey.com
PriorTaxProf Blog coverage:
- Tax Consequences of Extreme Makeover, Home Edition (12/17/06)
- IRS on Tax Consequences of Extreme Makeover: Home Edition Reality TV Show (4/23/06)
- More Scholarship on Tax Consequences of Extreme Makeover: Home Edition (12/4/05)
- Student Note on Extreme Makeover (10/13/05)
- More on Extreme Makeover: Taxpayer Edition (2/2/05)
- Extreme Makeover: Taxpayer Edition (7/5/04)
- Yet More on Extreme Makeover = Extreme Taxes (5/14/04)
- More on Extreme Makeover = Extreme Taxes (5/12/04)
- Extreme Makeover = Extreme Taxes? Tax Consequences of Home-Makeover TV Shows (5/10/04)
In several months of Moneylaw, contributors and commentators have come up with a list of measures which, at least on their own, are not indicative of success:
- USNWR ratings
- SSRN uploads or downloads
- Bar passage rate
- Bar passage rate as a function of entering glass GPA and LSAT score
- Scholarship citation and impact measures.
The measure of a good law school may not be susceptable to an end product approach at all. Maybe the measure of a good law school is what takes place on a day to day basis. For example:
- Are most faculty around most of the time?
- Do most read papers beforehand when there is a guest speaker?
- Are most available to students at least several hours a week?
- Are they willing to read drafts of colleagues an comment promptly?
- Are untenured faculty comfortable asking senior people to read drafts?
The list of the day to day activities is, of course, much longer. But my sense is that the focus has been too much on the "score" and not enough on hitting each stroke perfectly.
IRS Chief Counsel Donald L. Korb seeks applications for the 2007-08 Professor in Residence:
The Professor in Residence Program at the IRS Office of Chief Counsel is designed to achieve greater understanding of the academic and governmental perspectives on the development of tax law and policy. The program provides one law school professor per year the opportunity to apply his or her scholarly experience, research and writing in tax law to the full range of technical legal work and litigation handled by the Office of Chief Counsel by serving full-time on the Chief Counsel’s immediate staff for a full academic year. This prestigious position will enhance the professor’s stature within the tax bar and provide him or her the ability to serve the public and the law by meaningfully contributing to the development of tax policy, as well as to attain a comprehensive understanding of the Office of Chief Counsel. The program will also positively reflect upon the sponsoring law school’s reputation for excellence and help stimulate the interest of its students in public service and tax practice. The fresh ideas and perspectives brought to the position by the Professor in Residence will greatly benefit the Office of Chief Counsel and its attorneys as they pursue their mission to provide the best possible legal support to the Internal Revenue Service.
We previously blogged Chief Counsel Korb's revival of the Professor in Residence Program and his selection of Calvin H. Johnson (Texas) to serve in the position from January 1, 2007 - June 30, 2007 (IR-2007-06). Calvin's successor will serve from September 1, 2007 - June 30, 2008.
- Request for applications will be announced on or about February 1, 2007.
- Candidates will submit a one page letter of introduction and full curriculum vitae no later than March 1, 2007.
- The Chief Counsel and Deputies, with other executives as appropriate, will review the application materials and select the Professor in Residence by March 15, 2007.
Over the past two decades, a group of about a dozen very smart, very productive "elite professors" has engaged in a debate about the relative merits of income vs. consumption taxes. A recent article by a member of this group -- a scholar whose work I regard very highly -- begins: "Recently, a consensus seems to have emerged in favor of a consumption, or cash flow, tax."
A consensus? Really? Among whom? Members of Congress? The electorate? Members of the tax academy? No, to all of the above. The author in question was referring rather to an emerging consensus within the small group reading each other's articles on the issue. That "consensus," in turn, strongly influenced the recent recommendations of President Bush's Tax Reform Panel. Those recommendations, unfortunately, turned out to be completely out of sync with the electorate's views and were pronounced DOA.
In tax, the problem goes even deeper. For the past half century, opinion-shapers in the tax academy have viewed "ability to pay" as irrelevant to tax policy analysis. Congress, by contrast, views it as the starting place for almost all such analysis. ... In consequence, a colorable argument can be made that elite tax scholarship has actually contributed to the mess that is now the Internal Revenue Code.
The ABA Section of Real Property, Probate and Trust Law offers a teleconference and webcast today on Conservation Easements and the Pension Protection Act of 2006 from 1:00 - 2:30 p.m. EST:
Conservation easements have long been a powerful but overlooked tool that virtually all estate planners can use to expand their practice and better serve clients. With a significant deduction increase for the donation of conservation easements after the Pension Protection Act of 2006, now is the perfect time for estate planners to take advantage of the enhanced planning opportunities. During this live audio webcast and teleconference, our experts will examine the income, gift and estate tax implications for taxpayers who grant a conservation easement or similar restriction on real property.
- David J. Dietrich (Dietrich & Associates, Billings, MT)
- Jonathan G. Blattmachr (Milbank, Tweed, Hadley & McCloy, New York, NY)
Susan C. Morse (Santa Clara) has published The How and Why of the New Public Corporation Tax Shelter Compliance Norm, 75 Fordham L. Rev. 9616), on SSRN. Here is the abstract:
This paper examines the recent shift toward an anti-tax shelter compliance norm at public corporations, as evidenced by government and practitioner comments and survey results. The paper focuses on the organizational behavior of tax decision makers within public corporations as they respond to Sarbanes-Oxley, enforcement initiatives, and tax shelter regulation.
Monday, January 22, 2007
Kristin E. Hickman (Minnesota) has posted Coloring Outside the Lines: Examining Treasury's (Lack of) Compliance with Administrative Procedure Act Rulemaking Requirements, 82 Notre Dame L. Rev. ___ (2007), on SSRN. Here is the abstract:
The Treasury Department and the Internal Revenue Service have a strange relationship with Administrative Procedure Act notice-and-comment rulemaking procedures. Treasury acknowledges the general applicability of APA procedural requirements when it promulgates regulations interpreting the Internal Revenue Code. Treasury also maintains that most Treasury regulations are exempt from the APA's public notice and comment requirements. Nevertheless, Treasury purports to utilize those same procedures anyway in promulgating most Treasury regulations.
The IRS has released an interactive web-based training program for small and mid-sized exempt organizations: Stay Exempt – Tax Basics for 501(c)(3)s. It consists of five modules on tax compliance topics for exempt organizations:
- Tax-Exempt Status - How can you keep your 501(c)(3) exempt?
- Unrelated Business Income - Does your organization generate taxable income?
- Employment Issues - How should you treat your workers for tax purposes?
- Form 990 - Would you like to file an error-free return?
- Required Disclosures - To whom do you have to show your records?
The online workshop is free, does not require registration, and users remain anonymous.
Today's Chroncile of Higher Education picks up the story, first reported by our sister Leiter's Law School Reports, of Joe Knight's resignation as Dean of the University of Washington School of Law after six years:
His decision to resign came on the heels of an ethics complaint against him and amid criticism from some faculty members, neither of which Mr. Knight says influenced his decision. ...
[S]everal faculty members had complained to Ms. Wise about Mr. Knight's day-to-day management, citing lapses such as allowing a paperwork error to cause a drop in the law school's rankings in U.S. News & World Report. And the ethics complaint, filed with the state in October, asserts that Mr. Knight was using his university e-mail account improperly to conduct business for several State Farm insurance companies on whose boards he serves. Mr. Knight denies wrongdoing, and the state has yet to issue a decision.
The email allegation was filed by an anonymous UW employee and claims that Dean Knight sent or received 400 emails in a four-year period having to do with his service on the Board of State Farm. For more details, see:
- Law School Dean Resigns Amid Controversy (1/17/07), The Daily
- UW Law-School Dean Quits Over Infighting (1/13/07), Seattle Times
- UW Law School Dean's Resignation Draws Mixture of Surprise, Satisfaction (1/13/07), Seattle Post-Intelligencer
- UW Law School Dean Will Resign in June (1/12/07), Seattle Post-Intelligencer
- Law School Dean Under Review (1/3/07), The Daily
- UW Law Dean Subject to Ethics Complaint (12/20/06), Paloustics
- University of Washington Law Dean Subject of Ethics Complaint (12/11/06), Associated Press
- Complaint Says Dean Did Private Work on UW Time (12/8/06), Seattle Post-Intelligencer
The three-day 2007 USC Tax Institute kicks off today at the Los Angeles Millennium Biltmore Hotel. Tax Profs speaking today include:
- Ellen Aprill (Loyola-L.A.) & Richard Gruner (Whittier) on The Impact and Future of tax Strategy Patents
For the full list of speakers and their topics, see the program.
Oklahoma Wesleyan University is putting a full year of tuition, room, and board up for auction on eBay, beginning on February 4. Bidding will close February 10 For details, see:
Perhaps the school will have to amend its motto -- "A University Where Jesus Is Lord" -- to include "and the Highest Bidder Wins." There is no word on what impact the auction will have on the school's U.S. News ranking.
We have blogged news reports of celebrities like James Blount moving to Switzerland to avoid high taxes in their native countries. Switzerland now is considering raising taxes to stop the influx of rich foreigners:
- The Australian: Swiss Target Rich Foreigners
- Bloomberg: Switzerland, Millionaire "Paradise," May Raise Taxes
- International Herald Tribune: Flooded with Rich Immigrants, Swiss Debate Tax Code
Taxpayers Respond to Kentucky's Cert. Petition in Davis, Which Prohibits Tax Exemption for In-State Municipal Bond Interest
Taxpayers George and Catherine Davis have filed their response response to Kentucky's cert. petition in the U.S. Supreme Court in Davis v. Department of Revenue,193 S.W.3d 557 (Ky. App. 2006), in which the Kentucky Court of Appeals held that the state's tax system violates the dormant commerce clause of the U.S. Constitution by exempting interest on Kentucky state & local bonds while taxing interest on out of state bonds. The opinion notes that Kentucky's system is used in a majority of states, and that the only court to consider the commerce clause issue (Ohio) upheld the constitutionality of the system. The Kentucky Supreme Court denied the state's motion for discretionary review. Department of Revenue v. Davis, No. 2006-SC-105-D (8/17/06).
Prior TaxProf Blog coverage:
- Davis: Another Constitutional Shot Across the Tax Bow (with extensive commentary by Richard Pomp, Kirk Stark, Calvin Johnson & Greg Germain) (9/5/06)
- WSJ on Davis (9/6/06)
- Hellerstein on Davis (9/6/06)
- Kentucky Files Cert. Petition in Davis, Which Prohibits Tax Exemption for In-State Municipal Bond Interest (11/13/06)
- J.D. Division: Michigan State
- LL.M. Division: Loyola-L.A.
Best Written Submissions:
- J.D. Division: Santa Clara
- LL.M. Division: TBA
We will provide more details as they become available.
Sunday, January 21, 2007
- Tax Prof Profile: Boston University Tax Faculty
- Death of Richard Musgrave
- Bell on Law Prof Diversity, Hiring, and Tenure
- Tax Policy Center Releases Options to Fix the AMT
- Sugin on Encouraging Corporate Charity
- ABA Tax Section Mid-Year Meeting Concludes Today in Florida
- Top 5 Tax Paper Downloads
- WSJ: How Railroads Stopped IRS In Its Tracks on Maintenance Tax Credit
- Bush Proposes Health Insurance Tax Reform
- Armed NH Tax Protester Barricades Himself in Home
- WSJ: IRS Puts Donor-Advised Funds Under Microscope
- International Taxation in Canada
1. [205 Downloads] The Constitutionality of Federal Taxes and Federal Tax Provisions, by Joseph M. Dodge (Florida State) [blogged here]
2. [144 Downloads] Celebrating Life (Chai) and Taxes: Lessons Learned, Francine J. Lipman (Chapman) [blogged here]
5, [102 Downloads] Taxing Emotional Injury Recoveries: A Critical Analysis of Murphy v. Internal Revenue Service, by Gregory L. Germain (Syracuse) [blogged here]
Interesting article in the Weekend Wall Street Journal: Railroads Seek Tax Aid; "Short Line" Firms Pursue Credit's Extension, by Robert Guy Matthews:
The 400 small, often money-losing, railroads that connect isolated farm towns to major rail lines won a minor tax break from Congress in 2004 after strenuous lobbying [§ 45G, The Railroad Track Maintenance Credit] only to see the IRS write rules last September that limited the subsidy so much it was almost worthless.
But the short-line railroad industry, as it's known, is the little industry that could. It quietly got Congress at the end of last year to undo what the IRS had done, a classic example of the lobbying clout a small industry can wield if its pieces are across congressional districts and states from Vermont to Kansas.
Next stop for the short-line railroads: getting Congress to extend the $100 million annual tax break beyond its scheduled expiration at the end of this year. ...
In a 2004 bill, Congress said the taxpayers would pay 50 cents of every $1 spent on track maintenance and upgrading. The tax credit equaled about $3,500 per mile.
In his weekly radio address yesterday, President Bush previewed the proposal he will make in Tuesday's State of the Union Address to provide a flat standard deduction for both self-purchased health insurance and for employer-provided health insurance of $7,500 for individuals and $15,000 for families. The plan is modeled after the proposal in the Final Report of the President's Advisory Panel on Federal Tax Reform (albeit at lower amounts -- $5,000 for individuals and $11,500 for families). Press coverage:
From the Associated Press:
A former militia man convicted of tax evasion prepared for a government siege Friday at his fortress-like home, but U.S. marshals gave no indication they were planning to confront him. Ed Brown said he was ready for a swarm of federal agents to descend on his property to execute an arrest warrant issued after he failed to appear for the end of his trial. He and his wife contend that they did not have to pay income taxes, and his supporters say a conflict could be violent....
Brown, 63, and his wife, Elaine, 65, were convicted Thursday of plotting to conceal their income and avoid paying federal income tax. They argued the tax is illegitimate and they are not required to pay it.
(Hat Tip: Jim Maule.)
Interesting article in the Weekend Wall Street Journal: IRS Checks Virtues of Charity: Do Donor-Advised Funds Also Benefit the Donor?, by Arden Dale:
The IRS is putting donor-advised funds under the microscope. These funds, which have grown increasingly popular over the past few years, allow an individual to make a donation, receive an immediate tax deduction and then later "advise" which charities receive distributions. In 2005, donor-advised funds distributed more than $3 billion to charities, according to the Chronicle of Philanthropy.
A donor-advised fund can hold cash, securities, mutual funds and even real estate, depending on the rules of the entity, or "sponsoring organization," that administers it. Now the IRS is scrutinizing them, prompted by various worries, including the possibility that some donors have used the products as tax-free slush funds. The Pension Protection Act, passed in August, imposes fines and penalties for donors who use donor-advised funds to benefit themselves, their families or their financial advisers. The law also directed the IRS to study donor-advised funds over the next year and look at whether further rules are needed to prevent abuse. Some worry, however, that the new rules are discouraging donors.
Jinyan Li (Professor, Osgoode Hall Law School), Arthur Cockfield (Associate Dean and Professor, Queen’s University Faculty of Law) & Scott Wilkie (Partner, Osler, Hoskin and Harcourt, Toronto) have published International Taxation in Canada: Principles and Practices (LexisNexis, 2006):
Over time, Canada’s international tax laws have become more and more complicated. This unique book provides an understanding of the main principles and practices that frame international tax rules, which will assist you when confronted with the seemingly endless tax complexities of cross-border transactions, along with an appreciation of how foreign tax laws interact with their Canadian counterparts.
Saturday, January 20, 2007
The Boston University Graduate Tax Program, established in 1959 as one of the first graduate tax programs in the nation, continues to be one of the best. It consistently ranks among the Top 10 tax programs. The program offers a broad and diverse curriculum, with five required courses and 33 electives and concentrations in three areas:
- Business Tax
- Estate Planning
- International Tax
In a five-part series, TaxProf Blog profiled Boston University's full-time Tax Faculty:
Mr. Musgrave took about 20 years to conceive, write and publish the 1959 work for which he is best known, “The Theory of Public Finance,” an analysis of how governments allocate resources and respond to social needs. “It still stands unchallenged,” the economic historian Mark Blaug wrote decades later. "Anyone with a question in the theory of public finance can be told even now, 'it’s all in Musgrave.'” ...
He saw the government as having an important economic role and developed a theory on the way taxes and other factors interact in areas where goods and services — roads, schools, courts and national defense, for example — were best provided by the government. In essence, Mr. Musgrave’s theory broke down governmental economic activity into three parts: the allocation of resources; the distribution of goods and services; and the stabilization of the broader economy.
My MoneyLaw colleague Tom Bell (Chapman) has an interesting post, Law Prof Diversity, Hiring, and Tenure, which cites AALS data showing that women and minorities have enjoyed significant advantages in the law faculty hiring process over the past 14 years. Tom has some nifty charts highlighting the data, which average out over the period to these rates of success in landing a law teaching job:
- Minority Women 18.5%
- Minority Men 17.5%
- Non-Minority Women 15.0%
- Non-Minority Men 11.3%
The Tax Policy Center yesterday released a major new report, Options to Fix the AMT, by Leonard E. Burman (Senior Fellow, Urban Institute; Co-director, Tax Policy Center), William G. Gale (Arjay and Frances Fearing Miller Chair, Brookings Institution; Co-director, Tax Policy Center), Gregory Leiserson (Research Assistant, Urban Institute & Tax Policy Center) & Jeffrey Rohaly (Senior Research Methodologist, Urban Institute; Director of Tax Modeling, Tax Policy Center) Here is the Introduction:
The individual alternative minimum tax (AMT) was originally designed to limit the amount of tax sheltering that taxpayers could pursue and to assure that high-income filers paid at least some tax. The current AMT, however, has strayed far from those original goals. Under current law, the tax will affect over 23 million taxpayers in 2007—many of them solidly middle-class—and mainly for reasons that have little or nothing to do with what most people would consider tax sheltering.
One policy response would be to extend the temporary AMT provisions that expired at the end of 2006. This would keep the number of AMT taxpayers at about 4 million for another year, but it would cost more than $40 billion in 2007 alone and would grow more expensive in subsequent years. For these and other reasons, many policy makers, including House Ways and Means Committee Chairman Charles Rangel, Senate Finance Committee Chairman Max Baucus, and Finance Committee Ranking Member Charles Grassley have proposed permanent reform or repeal of the AMT.
This brief examines a variety of implications of AMT repeal or reform and an array of options for offsetting the revenues lost under such options. It begins with a description of the taxpayers affected by the AMT and an explanation of the dramatic growth projected for the tax as the context for evaluating reform options.
- Reuters: Fix U.S. AMT Tax by Cutting Deductions, by David Lawder
- Washington Post: Report Lists Possible Alternatives To Widely Disliked Minimum Tax, by Lori Montgomery
The tax law governing corporate philanthropy is stuck in an archaic notion of corporate charity that does not necessarily benefit either charities or corporate stakeholders. Four developments in the last few years provoked this reexamination of the Code’s awkward dichotomy between business expenses and charitable contributions, and offer new reasons for replacing the charitable contribution deduction for corporations with a business expense deduction: (1) a statutory reduction in the rate of tax on dividends received by individual shareholders, (2) death of the preeminent model of corporate philanthropy - Berkshire-Hathaway’s shareholder designation program (3) empirical evidence showing very low effective tax rates paid by corporations, and (4) adoption of final capitalization regulations that significantly weaken the capitalization requirement and no longer pose much of an obstacle to immediate deduction of corporate payments to charities. This seemingly small legal change offers many benefits in today’s climate: it would increase the coherence of a corporation’s tax treatment, help to minimize the agency costs in corporate philanthropy, and change the way that corporations define their charitable endeavors, encouraging greater overall corporate commitment to charitable and community needs, both within and outside their business operations.
Friday, January 19, 2007
The ABA Tax Section Mid-Year Meeting concludes today in Hollywood, Florida. Tax Profs presenting today include:
Sales, Echanges, and Basis
- 8:35 a.m.: Sales and Exchanges: Current Developments
- Erik Jensen (Case Western) (moderator)
- Brad Borden (Washburn)
- 9:00 a.m.: Sales and Exchanges of Leasehold Interests
- Brad Borden (Washburn) (moderator)
VAT and Other Consumption Taxes
- 8:45 a.m.: VAT and the US Foreign Tax Credit
- Reuven Avi-Yonah (Michigan) (moderator)
Fiduciary Income Tax
- 9:45 a.m.: Funding Trusts in the Crossfire of Conflicting Estate Tax, Income Tax and ERISA Laws:What’s the Use of Happiness If It Can’t Buy You Money?
- Christopher R. Hoyt (Missouri-Kansas City)
- 2:00 p.m.: Current Developments in Individual, Corporate, Partnership, and Estate & Gift Taxation
- Ira B. Shepard (Houston) (moderator)
- James A. Delaney (Wyoming)
- Martin J. McMahon Jr (Florida)
Foreign Activities of US Taxpayers and Foreign Lawyers Forum
- 2:00 p.m.: Application of Foreign Tax Credit "Legal Liability" Rules to Facts Raised by Foreign Consolidated Group Systems
- Reuven Avi-Yonah (Michigan)
Standards of Tax Practice
- 3:35 p.m.: The Ethics of Witness Preparation
- Linda Galler (Hofstra) (moderator)
Blunt, who earned £5 million ($9.8 million) from his debut album Back To Bedlam, is the latest in a long line of high-earners to quit their homeland for Switzerland - Phil Collins resides there and French rock legend Johnny Hallyday set up residence in Gstaad only last month.
Patrick Messeiller, director of tourism for Verbier, confirmed a report in the Swiss daily Le Matin that Blunt, who is a frequent visitor to the mountain village, had registered with the tax office there.
Each Swiss canton (state) sets its own tax rates, and can cut special deals with wealthy foreigners that allow them to pay only a fraction of what they would have to pay elsewhere.
The Tax Justice Network for Africa has been launched to fight tax-driven capital flight from Africa and the resulting detrimental effect on anti-poverty efforts across the world’s poorest continent. The network hopes to prompt governments to act against companies and individuals that shift assets to low-tax jurisdictions or tax havens to avoid or evade tax. For the network's detailed mission statement, see here.