Wednesday, November 23, 2011
Steve Jobs' widow may never find a better moment to sell her late husband's $6.78 billion of Apple and Walt Disney Co. stock.
Under federal law, Jobs' heirs may sell Apple and Disney and avoid $867 million in capital gains taxes. If Apple's late co-founder left his estate to his wife, Laurene Powell Jobs, the family won't be liable for the 35% estate tax until she dies or gives money to others, according to estate planners. ...
If Jobs had sold all of his Disney and Apple shares on Oct. 4, the day before he died, he would have registered a gain of about $5.78 billion and a tax bill of $867 million. ... Under the law, the trust can sell the shares and incur taxes only on the appreciation since Jobs' death - a gain of about $338 million. If Jobs had died in 2010, when there was no estate tax, his heirs would have faced the capital gains tax on his entire investment profit if they had sold. That provision lapsed in 2011 when the estate tax was reinstated. ... From a tax point of view, this is the perfect time to diversify. ...
|Ave. Law School|
|Total Law School
|Growth Rate||+10.9% (+$9,549)||+14.9% (+$2.4m)||N/A||+15.1% (+$473.7m)|
|#||Public School||2010 Grad Debt-Revenue||Z-Score|
|19||N. Carolina Central||15.4m
|#||Private School||2010 Grad Debt-Revenue||Z-Score|
|5||New York University||49.6m
|6||New York Law School||48.6m
Tuesday, November 22, 2011
This article suggests a better system for exercising judgment when filing the notice of federal tax lien on low dollar delinquent accounts.
All Tax Analysts content is available through the LexisNexis® services.
- A conflict between those who seek to discourage tax sheltering by requiring U.S. firms to pay taxes on all their activity ("worldwide" system), and those who seek to only tax corporate activity in the U.S. and leave overseas activity to other countries ("territorial" system), led to the enactment of the poorly designed compromise IRS Code Subpart F in 1962.
- Under Subpart F, "active" income can be deferred from U.S. tax until repatriated home, while "passive" income (royalties, interest, dividends) is generally subject to immediate U.S. taxation.
- Since 1996, "check the box" regulations have mitigated many of the harmful effects of Subpart F but political pressure to expand U.S. taxation of overseas activity continues.
- As one example of the complexity of Subpart F, royalty income from active business operations involving related firms cannot be deferred even though it by definition cannot be tax-haven activity.
- The U.S. should consider moving toward a territorial system, and in the meantime should review Subpart F for policies that discourage legitimate overseas business activity.
The worldwide rise of the Value-Added Tax (VAT) over the last half-century is emblematic of the paradox in modern tax systems: their remarkable similarity in the face of divergent political, cultural and social systems. However efforts to introduce VAT-style taxes have frequently been accompanied by fierce localized resistance. The histories of VAT reform in Australia, Canada and the United States encapsulate the tension that arises from a tendency among developed tax systems to converge against frequent and often fierce localized opposition. This tension speaks to a key debate in the public policy and comparative law literature concerning the transferability of policy ideas or legal instruments across jurisdictions. The Article details the history of VAT reform in Australia, Canada and the United States over a period of four decades, 1965-2005, where the global uptake of the VAT was at its highest, but where VAT reform in each jurisdiction was highly controversial. The Article concludes with an assessment of the factors that contribute towards tax policy convergence and localized resistance.
The failure of the bipartisan debt reduction committee to reach agreement means there are likely to be drastic cuts in federal spending that will result in many more Americans looking to the charitable sector to meet their needs. In the meantime, President Obama and Congressional Republicans have both proposed cutting the tax deduction for charitable giving as a way of generating much-needed federal revenue. But neither side is addressing a growing problem with charitable donations.
When most people think about charitable giving, they envision money going to support local food banks or educational organizations, or donations to the Red Cross that can be put to work immediately on disaster relief. But it is increasingly common for charitable donations to take a significant detour before ever being put to charitable use.
More and more charitable dollars are now being directed to what are called “donor-advised funds.” Many of these funds are affiliated with large financial institutions like Fidelity, Schwab and Goldman Sachs, and hold, invest and eventually distribute dollars for charitable purposes. In the meantime, they generate significant management and investment fees for the institutions that house them, which have little incentive to speed up the distribution of resources to the charitable sector. Most important, there is no payout obligation; while donors receive the tax deduction as soon as they make their contribution, their money can languish in these charitable holding pens for decades or even centuries (these funds are frequently marketed for their ability to allow donors to create a legacy for future generations).
Why do people choose to give to these funds over traditional charities? Some like the flexibility of being able to claim a deduction now, while delaying the decision of which charities will eventually receive the money. Others like the fact that they don’t have to keep track of receipts for multiple donations. But the bulk of these donations come from the wealthy, who often donate appreciated property — thereby benefitting from a deduction for the full value of the property, while avoiding taxes on capital gains. Private foundations also use donor-advised funds. By law, private foundations are obligated to spend 5 percent of their assets every year for charitable purposes, and contributing to donor-advised funds is an easy way to fulfill that obligation. ...
Regardless of the level of deductions allowed for charitable giving, President Obama and Congress should take steps to ensure that money qualifying for the deduction goes to serve charitable causes within a reasonable period of time. The problem is not with charitable donors, who are simply following the rules provided for them, but rather with laws that fail to provide adequate guidelines for distribution.
To that end, Congress should enact rules that require donor-advised funds to distribute all of their assets to real public charities within seven years of their contribution. In addition, Congress should make clear that private foundations cannot meet their payout obligations by making gifts to donor-advised funds. Then we can have a real conversation about the best way to feed all those hungry people.
The paper ... is designed to help policy makers better understand the impact of a VAT if used for deficit reduction. It compares adoption of a new VAT and higher income tax rates as alternative strategies for raising revenue to reduce the deficit. It looks at these two options in isolation from other policies such as spending cuts that also could contribute to deficit reduction and would allow for a lower VAT or smaller income-tax increases. In addition, it does not model any behavioral consequences of implementing these revenue policies.
Mark Thoma sends us to the new Journal of Economic Perspectives paper [The Case for a Progressive Tax: From Basic Research to Policy Recommendations] on optimal taxes by Peter Diamond [MIT] and Emmanuel Saez [UC-Berkeley]. ...
In the first part of the paper, D & S analyze the optimal tax rate on top earners. And they argue that this should be the rate that maximizes the revenue collected from these top earners. ... [T]his doesn’t imply a 100% tax rate, because there are going to be behavioral responses – high earners will generate at least somewhat less taxable income in the face of a high tax rate, either by actually working less or by pushing their earnings underground. Using parameters based on the literature, D&S suggest that the optimal tax rate on the highest earners is in the vicinity of 70%. ...
Right now the official rhetoric of the right, and a fair number of people who consider themselves centrist, is that high-income individuals are “job creators” who must be cherished for the good they do.
Yet textbook economics says that in a competitive economy, the contribution any individual (or for that matter any factor of production) makes to the economy at the margin is what that individual earns — period. What a worker contributes to GDP with an additional hour of work is that worker’s hourly wage, whether that hourly wage is $6 or $60,000 an hour. This in turn means that the effect on everyone else’s income if a worker chooses to work one hour less is precisely zero. If a hedge fund manager gets $60,000 an hour, and he works one hour less, he reduces GDP by $60,000 — but he also reduces his pay by $60,000, so the net effect on other peoples’ incomes is zip. ...
[Conservatives] have a deep-seated belief that the 1%, by working harder, are doing the 99% a big favor, creating jobs and raising incomes — and that this gain isn’t fully (or even largely) captured by the money they’re paid.
My point, then, is that this claim — and the lionization of high earners as people who make a vast contribution to society — is not, in fact, something that comes out of the free-market economic principles these people claim to believe in. Even if you believe that the top 1% or better yet the top 0.1% are actually earning the money they make, what they contribute is what they get, and they deserve no special solicitude.
With ever mounting frequency, law professors flood the courts with "scholars' briefs," in which they advise judges and Supreme Court Justices on how to resolve disputed issues based on their purportedly disinterested expertise. As often as not, however, scholars' briefs are not scholarly. They commonly offer one-sided depictions of relevant authorities. In addition, many signatories attach their names to assertions that overreach their scholarly expertise. Political orientation frequently drives participation.
Examination of the standards that should govern law professors' participation in scholars' briefs is long overdue. That topic -- which this Article opens up for debate -- is important not only for its own sake, at a time when appellate lawyers increasingly solicit supportive scholars' briefs as a routine litigation tactic, but also because it furnishes a window onto broader questions about law professors' professional roles and obligations. On the one hand, it is discomfiting that professors who claim the mantle of scholars would file briefs that deviate very considerably from the standards of scholarly integrity that apply to books and law review articles. On the other hand, we are long past the day, if ever there was one, when most law professors thought their sole professional contributions should come through traditional scholarship and teaching. By participating in scholars' briefs, law professors can potentially influence the direction of the law. And in many of law professors' professional activities, within bounds that need to be defined, an ethic of consequences requires the tailoring of arguments to audiences.
In this Article, Professor Fallon examines issues involving law professors' moral and ethical obligations through the lens of role-based moral theory. More particularly, he considers how professors' participation in scholars' briefs relates to other, presumptively permissible role-based activities in a world in which law schools boast in their alumni magazines and on their websites whenever faculty members author op-ed articles, appear on radio or television programs, testify before legislative committees, or even post comments on blogs. Professor Fallon argues that law professors ought to uphold higher standards of scholarly integrity -- which he carefully explicates -- than many now do when deciding whether to participate in scholars' briefs. Along that dimension, the Article offers strong prescriptions for reform. But the Article also demonstrates that it is impossible to identify the moral and ethical standards that should govern participation in scholars' briefs without taking account of the diversity of roles that professors play and of appropriate, role-based variances in their professional obligations. The Article's analytical framework offers a template for addressing myriad issues of professorial responsibility.
- Dan Markel (Florida State), Scholars and the Briefs They Sign (qua Scholars)
There continues to be an active debate on the question of whether or not law school is a good investment. I prefer to think of the question not in terms of “whether,” but in terms of “when.” In this essay, I conduct an analysis for three current undergraduates who are considering attending private law schools. I demonstrate how such individuals should take all known costs and all expected benefits into account in making their “investment” decision. As the calculation necessarily differs dramatically from one potential law student to another, my conclusions are far less important than my methodology.
[I]n terms of lost salary, the opportunity cost of law school attendees will vary greatly from one potential attendee to another. To reflect this variation, I will undertake an analysis for each of three very different but hopefully somewhat typical potential attendees. My first such potential law student is a college graduate whom I will name Also Ran. Also Ran achieves above average grades in a relatively nonmarketable major from a middle-of-the-pack undergraduate institution; he could have earned a mere $35,000 in a non-legal job. Also Ran manages to claw his way into a third-tier private law school (with a blended US News and World Report rank of 88th) and has only a poor prospect, which I will set equal to 5% in the current market, of landing an NLJ 250 job (i.e., a “Biglaw” job). My second potential law student is a college graduate whom I will name Solid Performer. Solid Performer achieves relatively good grades in a somewhat more marketable major from a better institution; he could have earned $42,500 in a non-legal job. Solid Performer makes his way into a second tier law school (with a blended US News and World Report rank of 50th) and has a better prospect than Also Ran, but still a relatively small prospect, of landing an NLJ 250 job. Specifically, I will assume that there is an 8% chance that Solid Performer ends up starting at Biglaw. My third potential law student is a college graduate whom I will name Hot Prospect. Hot Prospect earns strong grades in a relatively marketable major from a highly-ranked undergraduate institution; she could have earned $50,000 in a non-legal job. Hot Prospect attends a first tier law school (with a blended US News and World Report rank of 19th) and has a relatively strong chance, which I will set equal to 25% for purposes of my analysis, of ending up in an NLJ 250 entry-level position.
These numbers are bleak. What they say, in plain English, is that with the benefit of twenty-twenty hindsight, two-thirds of the graduates from Also Ran’s institution, four-fifths of the graduates from Solid Performer’s institution, and two-thirds of the graduates from Hot Prospect’s institution will know, as they are receiving their diplomas, that they made what has turned out ex post to be a bad investment!
Finally, it is interesting to turn the mode of calculation on its head, and thus directly confront the question of how much a legal education is worth. ...
[L]aw school is a very risky (and expensive) investment; it should not be entered into lightly. However, as I have already mentioned, and worth repeating again, each potential student’s calculus will be based on a host of factors unique to him or her. For some, like an English major (relatively low opportunity costs) who gets some scholarship assistance (somewhat lower out-of-pocket costs) to attend Harvard Law School (relatively high pay-off), the investment in a legal education is almost surely a no-brainer. Moreover, even for individuals facing a more challenging calculus, it may be the case that a legal education confers benefits beyond the incremental compensation that I have used to analyze the pure investment decision. For example, a law degree opens up many more avenues of potential employment, including importantly self-employment, than does a typical undergraduate degree; lawyers are found in all parts of the workforce performing all manner of jobs. Does this imply, perhaps, that some option value should be added to a law degree’s payoffs? If so, how would one measure such option value? And lastly, of course, a law degree is a professional degree; it confers considerable prestige. But alas, as I first pointed out two years ago, you cannot eat prestige.
For the 2009 numbers, see here. (The title, of course, brought to mind my article, Tax Myopia, or Mamas Don't Let Your Babies Grow Up to be Tax Lawyers, 13 Va. Tax Rev. 517 (1994).)
Income and wealth disparities become even more absurd if we look at the top 0.1% of the nation's earners-- rather than the more common 1%. The top 0.1%-- about 315,000 individuals out of 315 million-- are making about half of all capital gains on the sale of shares or property after 1 year; and these capital gains make up 60% of the income made by the Forbes 400.
(Hat Tip: Francine Lipman.)
This Essay critically reflects upon Professor Amy Chua’s memoir about being a tiger parent by offering a complementary personal memoir about growing up as a tiger cub. In so doing, this Essay examines some of the pros and cons of tiger parenting. This Essay advances three central proposals. First, this Essay suggests that a central goal of legal pedagogy and parenting should be to develop and improve Judgment and Decision Making (JDM) skills because they are crucial to achieving career and life satisfaction. In particular, tiger parenting and traditional doctrinal law school classes spend much time on developing what are known as system two JDM skills and spend little time on improving what are known as system one JDM skills. System two reasoning is analytical, cognitive, conscious, controlled, deliberative, effortful, logical, rule-based, and slow; while system one is affective, associative, automatic, fast, habitual, heuristic-based, holistic, intuitive, and unconscious. Second, this Essay advocates that law professors can reform legal education and parents can improve how they raise their kids by teaching more about emotions and emotional intelligence. Third, this Essay proposes that education about character, ethics, professionalism, values, and virtues is crucial to achieving lasting career satisfaction and sustainable personal happiness.
An ABA committee has completed work on its proposed plan to begin collecting more detailed job placement and salary information about recent graduates from ABA-accredited law schools.
The proposed changes, which have been recommended by the Questionnaire Committee of the Section of Legal Education and Admissions to the Bar, the ABA's accrediting arm, will be presented to the section's governing council at its Dec. 3 meeting in San Juan, Puerto Rico.
If approved, the changes would begin to take effect with the graduate placement questionnaire law schools will be required to fill out regarding the as-of-Feb. 15 employment status of members of the graduating class of 2011. That questionnaire would be due back to the ABA on March 15.
ABA officials anticipate that the data, which will eventually be published in the ABA-LSAC Official Guide to ABA-Approved Law Schools, could be available on the section's website as early as July.
The questionnaire committee's proposed changes with respect to employment data are largely identical to those being considered by the section's Standards Review Committee, which is now putting the finishing touches on its proposed new law school disclosure requirements.
Monday, November 21, 2011
Corporate tax advisors often wish to minimize a corporation’s tax liability without creating the risk that a court will reject the claimed tax treatment as “abusive.” However, courts’ decisions in this area are notoriously difficult to predict. While scholars and practitioners have devoted countless pages to debate over how judges should decide controversies involving corporate tax abuse, this Article is the first to conduct a large-N quantitative study of court decisions in an effort to identify the factors that influence how courts actually decide corporate tax abuse cases.
Our study reviews over 360 U.S. Supreme Court cases involving federal corporate tax issues decided between 1909 and 2011, roughly 140 of which involved allegations of corporate tax abuse. Our principal findings are surprising and counter to the conventional wisdom that judges do not follow predictable patterns when deciding corporate tax abuse cases. We find that the probability of government success increases when the initial controversy arises from the IRS’s denial of the corporation’s refund claim, when the government is the petitioning party and when federal spending on national defense escalates. The probability of government success decreases when the transaction at issue involves a third party and multiple transaction steps—unless alleged simultaneously in the briefs filed in Court, a strategy that increases the government’s chances of winning. Perhaps most surprising, notwithstanding the nearly obsessive attention paid to the business purpose doctrine by practitioners and scholars, the government’s assertion that the transaction at issue lacked a non-tax business purpose has either no statistically significant effect or a negative effect on the outcome of these cases.
Our study raises several important questions, both empirical and normative. These include whether tax lawyers could exploit the findings of this study when planning transactions and litigation, whether the business purpose for a corporation’s transaction should affect the tax treatment of that transaction, and whether the findings of this study are generalizable to the corporate tax abuse decisions in lower federal courts.
Michael Desmond (Bingham McCutcheon, Los Angeles; former Tax Legislative Counsel, Office of Tax Policy, U.S. Treasury Department) is the commenter.
[I]n the debate over tax rates paid by the nation’s wealthiest, ... [b]illionaires -- from [Billy Joe “Red”] McCombs to Philip Anschutz to Ronald S. Lauder -- who derive the bulk of their wealth from stock appreciation are using strategies that reap hundreds of millions of dollars from those valuable shares in ways the IRS often doesn’t classify as taxable income, securities filings and tax court records show.
“The 800-pound gorilla is unrealized appreciation,” said Edward J. McCaffery, a professor of law, economics and political science at the USC.
While Warren Buffett has generated attention with his complaints that he and his fellow billionaires pay federal income taxes at a lower rate than his secretary -- about 17% -- the real figure is often smaller, said David S. Miller, former chair of the tax section of the New York State Bar Association and a partner at Cadwalader, Wickersham & Taft LLP in New York. “The problem is not that people like Warren Buffett pay tax at a 17% rate, it’s that they can use complex transactions not available to most Americans to get cash from their appreciated stock without paying any taxes at all,” Miller said.The rate at which the 400 U.S. taxpayers with the highest adjusted gross income actually paid federal income taxes --their so-called effective tax rate -- fell to about 18% in 2008 from almost 30% in 1995, IRS data show. That’s the tip of the iceberg, since much of their wealth never converts into income on a tax return, McCaffery said.
- ABA Journal, Want to Make Law School a Better Bet? Require Waivers and Give Rebates to Dropouts, Yale Profs Say
- Above the Law, Pay to Go to Law School or Get Paid to Quit: You Won’t Be Learning Anything Either Way
- Paul Campos (Colorado), Skin in the Game
- Brian Tamanaha (Washington U.), The Responsibility of Yale Law School for the Rise of Tuition Nationwide--And What It Can do to Help
The government is probing tax breaks at more than 30 universities, including Harvard.
Harvard University owns a hotel that overlooks the Charles River and charges up to $300 a night for a room. The country’s richest higher-ed institution doesn’t pay a cent in taxes on revenue from the high-rise in Boston, Mass., and hasn’t for at least five years. Now, the Federal government wants to know: Are taxpayers getting shorted?
Not-for-profit universities are exempt from paying taxes on tuition or other money that relates directly to their educational mission. Still, the government has long required all nonprofits and even public schools to pay on a class of revenue known as “unrelated business income.” That’s a broad category, encompassing revenue from college-owned bookstores, restaurants, sports arenas, and other venues when they sell goods and services to the public. Although the regulation has been in place since 1950, the IRS has stepped up enforcement only recently, opening audits into more than 30 universities, Bloomberg Businessweek reports in its Nov. 21 issue.
The IRS declined to disclose a complete list of the schools under review. Notre Dame, Purdue, the University of Texas at Austin, Texas A&M, the University of North Carolina, the University of Georgia, Lamar University, the University of Central Florida, Yeshiva University, Suffolk University, and Harvard confirmed the IRS is scrutinizing them.
Law schools have long emphasized the theoretical over the useful, with classes that are often overstuffed with antiquated distinctions, like the variety of property law in post-feudal England. Professors are rewarded for chin-stroking scholarship, like law review articles with titles like “A Future Foretold: Neo-Aristotelian Praise of Postmodern Legal Theory.”
So, for decades, clients have essentially underwritten the training of new lawyers, paying as much as $300 an hour for the time of associates learning on the job. But the downturn in the economy, and long-running efforts to rethink legal fees, have prompted more and more of those clients to send a simple message to law firms: Teach new hires on your own dime....
Law schools know all about the tough conditions that await graduates, and many have added or expanded programs that provide practical training through legal clinics. But almost all the cachet in legal academia goes to professors who produce law review articles, which gobbles up huge amounts of time and tuition money. The essential how-tos of daily practice are a subject that many in the faculty know nothing about — by design. One 2010 study of hiring at top-tier law schools since 2000 found that the median amount of practical experience was one year, and that nearly half of faculty members had never practiced law for a single day. If medical schools took the same approach, they’d be filled with professors who had never set foot in a hospital. ...
[T]here are few incentives for law professors to excel at teaching. It might earn them the admiration of students, but it won’t win them any professional goodies, like tenure, a higher salary, prestige or competing offers from better schools. For those, a professor must publish law review articles, the ticket to punch for any upwardly mobile scholar.
There are more than 600 law reviews in the United States — Georgetown alone produces 11 — and they publish about 10,000 articles a year. Some of these articles are worthwhile and influential, and the best are cited by lawyers in arguments and by judges in court decisions. ... [But] many of these articles are not of much apparent help to anyone. A 2005 law review article found that around 40% of law review articles in the LexisNexis database had never been cited in cases or in other law review articles.
Of course, much of academia produces cryptic, narrowly cast and unread scholarship. But a pie chart of how law school tuition is actually spent would show an enormous slice for research and writing of law review articles.
How enormous? Last year, J.D., or juris doctor, students spent about $3.6 billion on tuition, according to ABA figures, accounting for discounts through merit- and need-based aid. Given that about half of a law school’s budget is spent on faculty salary and benefits, and that tenure-track faculty members consume about 80% of the faculty budget — and that such professors spend about 40% of their time producing scholarship — roughly one-sixth of that $3.6 billion subsidized faculty scholarship. That’s more than $575 million. ...
[A] law school’s reputation, and the value of its diplomas in the legal market, are almost entirely bound up in the amount and quality of the scholarship it produces. That’s been especially so since the late ’80s, when U.S. News and World Report started to rank law schools. The publisher’s annual rankings all but define a school’s standing in the legal academy’s firmament, and 40% of the U.S. News algorithm is based on a “quality assessment” survey by hundreds of lawyers, judges, deans and professors.
The problem is that with rare exceptions, all schools play the same scholarship-and-prestige game. Even professors in the lowest rungs churn out scholarship, and one of the first items of business for new schools is starting a law review. The result is a kind of arms race, with articles playing the role of nukes and students paying the bill.
In recent years, a law school’s reputation has been all but defined by the amount and quality of the law review articles produced by its faculty. The result has been an explosion of law reviews and law review articles. Though legal scholarship may be of little direct benefit to students — actually, much of it is never cited even by other academics — students pay for nearly every page of it through tuition. And the price is soaring.
- ABA Journal, The Costs of Legal Scholarship: $575M in Tuition and Grads Who Don’t Know How to Practice
- Jonathan Adler (Case Western), What Should Law Schools Teach? (What Should the NYT Learn?)
- Matt Bodie (St. Louis), A Recipe for Trashing Legal Scholarship
- Paul Campos (Colorado), The Cost of Legal Scholarship
- Jim Chen (Louisville), Everything I Needed to Practice Law, I Didn't Learn in Law School
- Rick Garnett (Notre Dame), Complaints About Law Schools as Efforts to Shift Costs to Law Schools
- Erik Gerding (Colorado), Theory and Practice in Legal Education and the NY Times News Cycle
- Michael Helfand (Pepperdine), Scholarship and Lawyering
- Jeffrey Kahn (SMU), “The First Thing We Do, Let’s [Train] All the Lawyers.”
- Orin Kerr (George Washington), Estimating the Costs of Legal Scholarship
- Orin Kerr (George Washington), What the NYT Article on Law Schools Gets Right
- Brian Leiter (Chicago), David Segal's Hatchet Job on Law Schools...
- Brian Leiter (Chicago), Today's NY Times Article on Legal Education
- Jim Levy (Nova), Institutional Resistance to Legal Skills Training Presents an Opportunity for Change for Schools Willing to Become That "Oddball Place."
- Jason Mazzone (Brooklyn), David Segal on Law Schools
- Frank Pasquale (Seton Hall), New York Times Financial Advice: Be an Unpaid Intern Through Your 20s (Then Work till You’re 100)
- Larry Ribstein (Illinois), The NYT on Law Teaching
The curtain shielding the Church of Scientology's high-pressure fundraising in Clearwater and elsewhere has been raised, and the view is not pretty. In a revealing St. Petersburg Times series, former Scientology fundraisers detail the coercive methods they used in their desperate efforts to meet weekly quotas. Former church members describe how they were repeatedly harassed into making contributions and buying Scientology materials they could not reasonably afford. The revelations warrant a review by the Internal Revenue Service of Scientology's practices and a debate in Congress about requiring more openness from religious institutions about their finances.
The Times' series by Joe Childs and Thomas C. Tobin offers an unprecedented inside look at Scientology's continuous money machine and the strategies used to keep it humming. ...
Despite the church's claims to the contrary, Scientology does not appear to be the organization it claimed to be when the IRS granted it the coveted tax-exempt status in the 1990s. Former members describe a much more difficult process for obtaining refunds. Many more church staffers appear to be involved in fundraising than officials claimed at the time. The money raised also has increased substantially. The Church of Scientology never should have been granted tax-exempt status, and the IRS should revisit that decision. Short of that, there is more than enough public information available to justify an IRS audit to determine if a reasonable amount of proceeds are spent for tax-exempt purposes.
- California Tax Attorney Blog
- Crowe Tax Blog
- Dow Lohnes Price Tax Consulting Group
- Federal Tax Crimes Blog
- International Tax Blog
- Ohio State Tax Blog
- Private Equity, Venture Capital and Hedge Fund Taxation
- Roth Tax Update Blog
- Start Making Sense
- Tax Dood
- Tax Girl.com
- Tax Law Blog
- Tax Policy Blog
- Tax Prof
- Tax Problem Attorney Blog
- Tax Trials
- TaxVox Blog
- Texas State and Local Tax Law
- The Conglomerate
A new and better day for sales tax administration is within reach. It will begin as soon as vendors are required to have escrow accounts and states begin sweeping those accounts. In short order, states will transform their sales tax systems into modern automated systems that are fairer, less demanding on business, and more efficient to administer. Better yet, those systems will reduce delinquencies, increase revenue, level the playing field for businesses, and provide the state with a vastly better and more predictable revenue stream.
All Tax Analysts content is available through the LexisNexis® services.
Sunday, November 20, 2011
- Some Billionaires Pay 1% Tax Rate
- Akhil Amar & Ian Ayres: Law Schools Should Pay Students to Quit
- NTA Conference on Taxation
- Ectopia, Fictions, and Autopoiesis: Income Tax Law and Analytical Jurisprudence
- CTJ: 2009 Estate Tax Data
- Top 5 Tax Paper Downloads
- IRS Releases Fall 2011 SOI Bulletin
- A Mandatory Distribution Requirement for University Endowments
Citizens for Tax Justice, State-by-State Estate Tax Figures Show that President’s Plan Is Too Generous to Millionaires:
New data from the IRS show that only 0.3 percent of deaths in the U.S. in 2009 resulted in federal estate tax liability in 2010. ... The nearby table shows that those 0.3 percent of estates of people who died in 2009 were taxed at an effective rate of about 19 percent by the federal government. Over two-thirds of the value of those estates was left to heirs while about a tenth was left to charity,
2. [328 Downloads] Charitable Gifts by S Corporations and Their Shareholders: Two Worlds of Law Collide, by Christopher R. Hoyt (Missouri-Kansas City)
4. [278 Downloads] Charitable Gifts by S Corporations: Opportunities and Challenges, by Christopher R. Hoyt (Missouri-Kansas City)
5. [232 Downloads] 2011 Federal Tax Update, by Samuel A. Donaldson (U. Washington)
- Individual Income Tax Returns, 2009 (p.5), by Justin Bryan
- Partnership Returns, 2009 (p.68), by Nina Shumofsky & Lauren Lee
- Municipal Bonds, 2009 (p.158), by Aaron Barnes
- Charities and Other Tax-Exempt Organizations, 2008 (p.191), by Paul Arnsberger & Mike Graham
The endowments of wealthy colleges and universities became a subject of scrutiny in the popular press and in Congress before the economic crisis, when the funds seemed to grow annually by the billions without fail. But this growing wealth was accompanied by questions about whether universities were doing enough to support student financial aid, especially in light of rising tuition. Critics accused universities of 'hoarding' their wealth rather than using it to benefit current students. In response, lawmakers at the state and federal levels considered regulating or taxing university endowments. One of the proposals that gained wide traction would have required universities to spend at least five percent of their assets each year - a 'mandatory payout.'
This Note focuses on the mandatory payout proposal. I provide an introduction to university endowments and the endowment controversy, including the payout proposal. I survey the arguments for a payout offered by its proponents. I then trace the abatement of the controversy during the economic crisis and explain why we can expect scrutiny to return now, possibly at an even greater intensity.
I then argue that state and federal lawmakers should not adopt a five percent payout requirement. First, I explain why the strongest arguments offered by proponents of a mandatory payout are unpersuasive: a payout will not increase college affordability; the universities that would be subject to payout legislation are the wrong target because they already provide generous financial aid; and the comparison of university endowments to private foundations is misguided. Next, I explain why a payout will have harmful implications for colleges and universities: it will accelerate the academic arms race, constrain institutions’ ability to respond to economic fluctuations, risk harming American universities’ international preeminence, and lead to a decrease in spending in the long term. A payout may also become a ceiling, incentivising institutions not to spend above it. Finally, a payout will breach principles of university autonomy and academic freedom.
Saturday, November 19, 2011
A crisis is threatening legal education. In constant dollars, tuition at private law schools nearly tripled over the last quarter century. Many a graduate faces a six-figure debt and can’t find a job paying enough to service that debt. Especially troubling are allegations that some schools admit students they know are unlikely to repay their loans--leaving taxpayers (who guarantee some of these loans) holding the bag. ... [W]e have a few ideas for dramatic reform.
First, give applicants better information about how past graduates have fared. All students who received federal loans should be required to report whether they passed the bar as well as their annual salary for the first 10 years after graduation. Law schools should be required to disclose this information in a standardized format, enabling applicants to better assess what their degree will be worth, long-term. This reform directly addresses the current problem of woefully incomplete disclosure. Law schools usually only report how well their most successful students do, and only for the first year after graduation. ...
But more transparent information at the threshold of law school is only the start. Many an entering student believes that he will beat the odds and win the lottery. Once in law school, many may be inclined to double down on a bad bet unless schools intentionally structure a system of sober second thought.
Consider the innovative employment policy of the Internet shoe seller Zappos. At the end of a four-week training course, Zappos offers new employees a one-time offer of $3,000 to quit. In part, the company uses the offer as a screening device. If you’re the type who prefers a quick three grand to the opportunity to work at a great company, then Zappos isn’t the place for you.
Law schools might analogously offer to rebate half of a student’s first-year tuition if the student opts to quit school at the end of the first year. (If the student has taken out government loans, this rebate would first go to repay this debt.) A half-tuition rebate splits the loss of an aborted legal career between the school and the student. Each has skin in the game, so students will not go to law school lightly, and law schools will have better incentives not to admit students likely to fail.
The idea is to mark the end of the first year, after students have received their grades, as a salient decision-making point. At that time, students will have learned more about their legal abilities and inclinations. Law schools will also have learned more about each student’s abilities, and schools could now disclose how previous students with similar first-year grades fared after graduation. Students accepting the offer would be choosing to quit not just their school, but the pursuit of a law degree. ...
After a few years, law schools could disclose what proportion of students, with varying grade profiles, accepted the rebate offer. They could even disclose the salaries of the former students who had accepted the rebate offer and left the school. This comparative disclosure would provide applicants with powerful new information to make better decisions about whether to continue their legal careers.
In making this proposal, we might be accused of having an institutional conflict of interest. We’re pretty confident that few students at Yale (like few employees at Zappos) would take the bribe to quit early. But if we’re right, this is something about which to be proud. If 20% of the students at another school took the offer, applicants might think twice before enrolling. And if the percentage taking the rebate becomes too large, government should think twice before lending. ...
We’re lobbying our dean to unilaterally offer our students a bribe to quit. Like Zappos, Yale could gain a first-mover advantage.
Federal Influence on State Taxation: Description and Prescription
- Brian Galle (Boston College) (Organizer)
- Darien Shanske (UC-Hastings) (Moderator)
- David Gamage (UC-Berkeley), The Way Forward for State Taxation of E-Commerce
- Darien Shanske (UC-Hastings), An Argument for Privileging the Local Property Tax Under the Federal Income Tax
- Kirk Stark (UCLA), Bribing the States to Tax Food
- Discussants: David Agrawal (Michigan), David Sjoquist (Georgia State), Kirk Stark (UCLA)
- John Prebble (Victoria University of Wellington), Why is Tax Law Incomprehensible?
- John Prebble (Victoria University of Wellington), Ectopia, Formalism, and Anti-Avoidance Rules in Income Tax Law
- John Prebble (Victoria University of Wellington), Ectopia, Tax Law and International Taxation
- John Prebble (Victoria University of Wellington), Fictions of Income Tax
- John Prebble (Victoria University of Wellington), Income Taxation: A Structure Built on Sand
- Geraldine Hikaka (Edmund Lawler & Associates) & John Prebble (Victoria University of Wellington), Autopoiesis and General Anti-Avoidance Rules
- John Prebble (Victoria University of Wellington), Justice Hill and the Autopoiesis of Income Tax Law
Friday, November 18, 2011
Congress uses the income tax to regulate. Because states impose their own income taxes on the federally-defined income tax base, rather than on separately determined state tax bases, states automatically import federal policies into their own tax systems. But federal tax policies reflect national, not local, political choices. This Article calls attention to the practice of tax base conformity and to its advantages and drawbacks. Conformity conserves legislative, administrative, and judicial resources, and it reduces taxpayers’ compliance burdens. At the same time, however, conforming states cede tax autonomy to the federal government, thereby exposing themselves to revenue volatility stemming from the ever-changing federal tax law. Additionally, conformity jeopardizes the values served by federalism, including regulatory competition, diffusion of power, promotion of local values and policy preferences, and policy experimentation. Conformity also imports the defects of the federal tax base into state tax law. While the significant administrative and compliance advantages of federal-state tax base conformity suggest that it is here to stay, this Article makes recommendations for reducing its adverse impacts and for further study.
Before law school, Kamin spent a year working on federal fiscal policy at the Committee for Economic Development, and two years at the Center on Budget and Policy Priorities, focusing on deficit projections, tax legislation and social security reform. After graduating from NYU Law, Kamin worked as special assistant, and later adviser, to Peter Orszag, director of the U.S. Office of Management and Budget, helping to formulate policy for President Obama’s first two budgets.
Kamin’s research and teaching interests are in the areas of federal taxation, federal budget law and policy, state and local taxation, and administrative law.
He published Note, What Is a Progressive Tax Change?: Unmasking Hidden Values in Distributional Debates, 83 N.Y.U. L. Rev. 241 (2008).
The burden of proof is a central feature of all systems of adjudication, yet one that has been subject to little normative analysis. This Article examines how strong evidence should have to be in order to assign liability when the objective is to maximize social welfare. In basic settings, there is a tradeoff between deterrence benefits and chilling costs, and the optimal proof requirement is determined by factors that are almost entirely distinct from those underlying the preponderance of the evidence rule and other traditional standards. As a consequence, these familiar burden of proof rules have some surprising properties, as do alternative criteria that have been advanced. The Article also considers how setting the proof burden interacts with other features of legal system design, such as the determination of enforcement effort and the degree of accuracy of adjudication. It compares and contrasts a variety of legal environments and methods of enforcement, explaining how the appropriate evidence requirements differ qualitatively across contexts. Most of the questions raised and answers presented differ in kind — as well as in result — from those in prior literature.
In June I wrote a post about the coming crunch for law schools,[and here] which asserted that law schools should anticipate a significant decline in the number of applicants in coming years. ... Three recent signs indicate that this will happen more quickly and to a greater degree than I suggested in the post.
The first indication is the disclosure that every student in the 2011 entering class of Illinois law school, including students admitted off the wait list, received tuition discounts. When everyone gets a scholarship, that constitutes a de facto tuition reduction, an indication that a law school is having trouble filling its seats at the list price. Given that Illinois is an excellent law school, it is likely that other schools are in the same position.
The second sign is more serious. The October 2011 LSAT, which is the highest volume test for people considering law school, had 16.9% fewer takers than the previous year. It was the lowest number of people to sit for the October exam in a decade. And it was the fifth straight LSAT administered to show a substantial decline from the same test the year before. ...
The third sign is perhaps the most alarming for law schools: the yield of applicants to test takers has been falling steadily in recent years. ... In 2010 and 2011, only around 63% of the people who took the test applied to law school. Law schools are caught in the grip of two separate, reinforcing declines that portend a severe contraction in the immediate future: fewer people are taking the LSAT test, and fewer people who take the test go on to apply to law school. A painful dose of economic discipline for law schools is just around the corner.
"We started talking about it when things were going great in the legal market," said Dean Robert Rasmussen. "Quite frankly, the demand was drying up and people coming out of the tax LL.M. program would not have had the same prospects as students coming out with a J.D. from USC. The recession hit, and we just didn't feel comfortable saying, 'Please give us $50,000 and a year of your life,' unless we could improve their job prospects."
The school launched a feasibility study in 2007 and planned to open the program with approximately 15 students, eventually increasing that number to 30. The tax LL.M. would have been USC's first LL.M. program for domestic students. It already has one for international students.
But the 2010 target date for opening the program was put off until this year. And then the law school pulled the plug, Rasmussen said on Nov. 17.
Law schools have been adding LL.M. programs at a fairly steady clip. The number of LL.M. degrees conferred by American Bar Association-approved law schools grew by 65% between 1999 and 2009 — far outpacing the 13% growth in J.D.s. LL.M. programs were seen as good revenue generators for schools, since they often don't require the hiring of many additional faculty members. Advanced law programs have also been viewed by some students as a way to wait out a difficult job market.
Rasmussen said the law school was never motivated by the bottom line. "Our degree has tremendous value," he said. "We don't issue degrees to make money."
He noted that USC retains ABA approval for a tax LL.M. program and has the faculty to run it. It could pursue the program in the future if demand for the credential improves, Rasmussen said.
General Session in Honor of Alan Auerbach, 2011 Holland Award Recipient
- Rosanne Altshuler (Rutgers) & James Hines (Michigan) (Organizers)
- Dhammika Dharmapala (Illinois)
- Presentations by Rosanne Altshuler (Rutgers), William Gale (Brookings Institution), James Hines (Michignan), Laurence Kotlikoff (Boston University), James Poterba (MIT)
The Corporate Tax in Integrated Economies:
- Kimberly Clausing (Reed College) (Oganizer & Moderator)
- Rosanne Altshuler (Rutgers)& Li Liu (Oxford), Measuring the Burden of the Corporate Income Tax Under Imperfect Competition
- Kimberly Clausing (Reed College), Investigating the Incidence of the Corporate Tax in a Global Economy
- Daniel Shaviro (NYU), The Rising Tax-Electivity of U.S. Corporate Residence, 64 Tax L. Rev. 377 (2011)
- Discussants: William Gentry (Williams), Joel Slemrod (Michigan), Dhammika Dharmapala (Illinois)
General Electric, one of the largest corporations in America, filed a whopping 57,000-page federal tax return earlier this year but didn't pay taxes on $14 billion in profits. The return, which was filed electronically, would have been 19 feet high if printed out and stacked.
The fact that GE paid no taxes in 2010 was widely reported earlier this year, but the size of its tax return first came to light when House budget committee chairman Paul Ryan (R, Wisc.) made the case for corporate tax reform at a recent townhall meeting.
Here are the facts around our taxes. GE paid almost $2.7 billion of income taxes to governments around the world during 2010 including payment of substantial income taxes to the US government for prior years. GE paid income taxes for our 2010 return. GE also paid more than $1 billion in other federal, state and local taxes in the U.S. in 2010. The main reason why GE’s tax rate was so low in 2010 was that we lost billions of dollars in GE Capital as a result of the global financial crisis.
Prior TaxProf Blog coverage:
- NY Times: GE: Tax Imagination at Work (Mar. 25, 2011)
- Jon Stewart on G.E.'s 0% Tax Rate (Mar. 29, 2011)
- GE Responds to NY Times Criticism of its Tax Planning (Mar. 31, 2011)
- CJR: GE Flubs Tax Pushback Against the New York Times (Apr. 1, 2011)
- NY Times Lies About GE's Zero Income Tax Bill (Apr. 4, 2011)
- The Onion's Take on GE's Aggressive Tax Planning (Apr. 6, 2011)
- Johnston: NY Times Pays 6x Higher Tax Rate Than GE (Apr. 11, 2011)
- GE Gets Punk'd: AP, USA Today Fall for GE's Claimed Return of $3.2b Tax Refund (Apr. 13, 2011)
- GE Responds to David Cay Johnston (May 2, 2011)
- Johnston: America is GE's Tax Haven (Aug. 24, 2011)
- TNR: Elizabeth Warren v. GE on Taxes (Sept. 15, 2011)
Section 721 generally allows nonrecognition of the built-in gain on a contribution of appreciated property to a partnership. This proposal would require recognition of gain on property at the value set by the bargain and allow recognition of loss when the partnership is not related. It would allow deferred payment of tax on nonmarketable assets, computed at the time of contribution, but would require interest at an appropriate rate. Recognition of gain would end current abuses, including diversification of investments without tax in swap funds and a step-up in depreciable basis without recognition on the other side. Given the nation’s revenue needs, tax on the contribution exchange is merited.
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Thursday, November 17, 2011
For hundreds of tax practitioners, the NYU Institute on Federal Taxation is the event of the year. The Institute addresses all major areas of taxation and attracts attorneys, general tax practitioners, and specialists; accountants; corporate treasury and compliance executives; tax managers; and financial planners seeking expert discussion of the latest technical, legislative, and planning developments.
The Institute is designed for the practitioner who must frequently anticipate and handle federal tax matters. It provides high-level updates, practical advice you can implement, and in-depth analysis of the latest trends and developments from leading experts. Attendees return to work with a wealth of materials, plus the tools and strategies needed to help save tax dollars for their clients and provide them with better service. Just as important, the Institute provides you with the opportunity to meet practitioners from around the country and share ideas, exchange views, learn what others are doing, and obtain credit for continuing education.
This paper and its companion (Stateless Income, 11 Fla. Tax Rev. ___ (2011)) together comprehensively analyze the tax consequences and policy implications of the phenomenon of “stateless income.” Stateless income comprises income derived for tax purposes by a multinational group from business activities in a country other than the domicile of the group’s ultimate parent company, but which is subject to tax only in a jurisdiction that is neither the source of the factors of production through which the income was derived, nor the domicile of the group’s parent company.
A lack of leadership and the failure to support and mentor junior colleagues have been highlighted in a major study of the professoriate.
Of the 1,200 academic staff from lower grades who responded to a survey commissioned by the Leadership Foundation for Higher Education, more than half (53%) said they did not receive sufficient help or advice from professorial staff. Only about one in seven (14%) said they did receive enough support. Asked if they had received excellent leadership or mentoring from professors in their university, 26% said "never" and 36% "occasionally". This compares with 9% and 19% who responded "very often" and "quite often", respectively.
If educating is on the Occupiers’ to-do list, they may want to look at the above chart from my Senate Finance Committee testimony back in September. (It’s based on data from a nice article by Tony Atkinson, Thomas Piketty and Emmanuel Saez.) The solid line shows the share of income earned by the top 1% circa 1949 for selected countries. The countries are sorted in order of their 1949 inequality rank. As you can see, the US was solidly in the middle with a top income share of 11%. That all changed by 2005, depicted by the red squares in the chart. At that point, the US leads the pack.
While the law-school dean is denying a link between the Sandusky scandal and an email sent to prospective students Wednesday offering to waive the standard $60 application fee, recipients are mocking the timing.“We know you have a lot to think about right now and we hope that Penn State Law is among the top law schools you are considering,” Amanda DiPolvere wrote in the email, a copy of which was obtained by The Daily Beast. Addressing the media frenzy surrounding former Penn State assistant football coach Jerry Sandusky since a Nov. 4 grand-jury report detailed alleged child sex abuse, she added, “No doubt you have seen recent headlines regarding Penn State University.” “Penn State’s new president is dedicated to restoring the trust of all people Penn State serves and to a renewed focus on Penn State’s status as one of the world’s preeminent research universities,” she wrote. Then DiPolvere, whose admissions office last year received more than 5,300 applications, many paying a “$60 nonrefundable application fee,” offered up a carrot for prospective students: “To make it easier for you to apply, we have waived your application fee.”
(Hat Tip: Brad Mank.)
For another creative use of a seating chart, see here.
With its recent success in luring Nancy Staudt from Northwestern to join its incredibly strong group of Tax Profs -- Elizabeth Garrett (currently USC's Provost), Thomas Griffith, Edward Kleinbard, and Edward McCaffery -- USC is well positioned to support the program once market conditions improve. USC has experienced an upward trajectory in the U.S. News tax rankings in recent years (USC ranks 14th in the 2012 U.S. News Tax Rankings (up from 16th in 2011; USC was unranked in tax in 2010) and solidifies Los Angeles' #1 position in Ted Seto's Tax Faculty Metropolitan Area Rankings.
For more on the decision to attend graduate tax programs in the current economic climate, see:
- Paul Caron (Cincinnati), Jennifer M. Kowal (Loyola-L.A.) & Katherine Pratt (Loyola-L.A.), Pursuing a Tax LLM Degree: Why and When?
- Paul Caron (Cincinnati), Jennifer M. Kowal (Loyola-L.A.), Katherine Pratt (Loyola-L.A.) & Theodore P. Seto (Loyola-L.A.), Pursuing a Tax LLM Degree: Where?
Economic Analysis and Legal Doctrines of Taxation:
- Sarah Lawsky (UC-Irvine) (Organizer)
- Leandra Lederman (Indiana) (Moderator)
- Ruth Mason (UConn) & Michael Knoll (Penn), What Is Tax Discrimination?, 121 Yale L.J. ___ (2011)
- Sarah Lawsky (UC-Irvine), Modeling Tax Law’s Uncertainty
- Alex Raskolnikov (Columbia), Not Close Enough: Accepting the Limits of Tax Law and Economics
- Nancy Staudt (USC) & Joshua Blank (NYU), Corporate Tax Abuse in Court
- Discussants: Kirk Stark (UCLA), Lawrence Zelenak (Duke)
Mulitnationals, Transfer Pricing, and IPOs:
- Dhammika Dharmapala (Illinois) (Organizer)
- Nirupama Rao (NYU) (Moderator)
- Yariv Brauner (Florida), Cost Sharing and the Acrobatics of Arm’s Length Taxation
- Mihir Desai (Harvard) & Dhammika Dharmapala (Illinois), An Alternative Transfer Pricing Norm
- Eric Allen (UC-Berkeley) & Susan Morse (UC-Hastings), Firm Incorporation Outside the U.S.: No Exodus Yet
- Scott Dyreng (Duke), Bradley Lindsey (William & Mary), Kevin Markle (Dartmouth) & Douglas Shackelford (North Carolina), Taxes and the Clustering of Foreign Subsidiaries
- Discussants: Joseph Andrus (OECD), Daniel Shaviro (NYU)
Other Tax Profs with speaking roles today include:
- Leonard Burman (Syracuse) & Marvin Phaup (George Washington), Tax Expenditures, the Size and Efficiency of Government, and Implications for Budget Reform
- Mihir Desai (Harvard), Dhammika Dharmapala (Illinois) & Victor Fleischer (Colorado), Tax and the Nature of the Firm
- Larry Zelenak (Duke), The Federal Income Tax in Popular Culture
The hearing will focus on the Ways and Means discussion draft released on October 26, 2011. For purposes of this hearing, the Subcommittee is particularly interested in comments and analysis of the basic architecture of the draft exemption system, including the scope of the 95% exemption for certain dividends and capital gains, the treatment of different forms of entities and ownership structures, and the transition rule applied to pre-effective date earnings. The hearing also will review the various options for protecting the U.S. tax base, both with respect to thin capitalization rules and income-shifting through the location of intangible property and similar means.
- John L. Harrington (SNR Denton)
- Tim Tuerff (Deloitte Tax)
- David G. Noren (McDermott, Will & Emery)
- Paul W. Oosterhuis (Skadden)
- Martin A. Sullivan (Tax Analysts)
It's that time of year when law school faculties are inundated with so-called "law school porn" — slick mailings extolling the virtues of individual law schools meant to sway voting in the U.S. News & World Report's reputation survey, now underway.
Some legal educators believe the annual barrage of mail has gotten out of control, and proves that rankings are driving administrative decisions. They say it's time to stop paying for glossy brochures and invest that money in students.
"Some of the stuff I get is gorgeous," said University of New Hampshire law professor Sarah Redfield. "It's almost a book. Some people are spending a bunch of money on this."
A study released in 2009 that was partially funded by the Law School Admission Council, "Fear of Failing: The Effect of U.S. News & World Report Rankings on U.S. Law Schools," reached the same conclusion: that administrators are spending significant amounts of money on brochures and marketing materials in hopes of getting better results on the reputation survey. ...
For Redfield, however, the proliferation is a disturbing sign of how law school resources are being allocated. "However much it costs, it seems to me inappropriate," she said. "It's like U.S. News & World Report is setting the music and we're all singing to it."
Redfield brought a thick stack of the material to a law school admissions conference at St. John's University School of Law on Nov. 11. It represented about one quarter of what she had received this fall, she said. She theatrically dropped the stack into a recycling bin, producing a loud thud, and issued a challenge to the law deans in the audience and to U.S. News Director of Data Research Bob Morse, who sat on a panel with her. Law schools should do away with law school porn and put the money toward diversity scholarships, Redfield said. ...
Redfield's idea was met with skepticism by St. John's Dean Michael Simons. He did not specify what the school spends on its mailings, but stipulated that it would not be enough to fund even a half-scholarship. The National Law Journal contacted a number of law schools to ask what they spend; none responded.
"I'm skeptical that we're talking about enough money to make a difference, as far as making a difference in diversity at law schools," he said. "But I agree with [Redfield] that the glossy brochures are an obvious and visible way that U.S. News influences how we spend our money."
Redfield said that a large number of law school deans would need to agree to stop producing the material for the plan to work, since no single school would likely be willing to risk their reputation score by going it alone.
- Stephen Bainbridge (UCLA), Law Porn Morphs into Law Spam
- Paul Horwitz (Alabama), Two Cheers for "Law Erotica"