Paul L. Caron

Monday, September 30, 2013

Oh Presents The Politics of Temporary Tax Legislation Today at Loyola-L.A.

OhJason Oh (UCLA) presents The Pivotal Politics of Temporary Tax Legislation at Loyola-L.A. today as part of its Tax Policy Colloquium Series:

Crucial to the debates surrounding temporary tax legislation are two types of uncertainty. Will the temporary provision be renewed when it is scheduled to expire? If it is renewed, will the temporary provision change? This article explicitly models the renewal of temporary legislation by extending a political science model of the legislative process. This allows a specification of the conditions under which such uncertainties are likely to be significant. Thus, we can begin to sort temporary provisions that are functionally permanent from those that are truly temporary. This has important consequences for several debates including how temporary legislation is scored for budgetary purposes.

Katherine Pratt (Loyola-L.A.) is the commentator.

September 30, 2013 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Savannah Law School Seeks to Hire a Tax Prof


Savannah Law School seeks to hire entry level and lateral faculty in a variety of subject areas, including tax:

All positions including Legal Writing are tenure track with full voting rights and publishing expectations.  We seek promise and commitment to teaching and scholarship as well as a genuine interest in building a dynamic law school community.

Savannah Law School is a private law school located in historic Savannah, Georgia (pop. 140,000) where the mansions are affordable, the coastal sun shines brightly, and artists still make art.

Savannah Law School, an Equal Opportunity/Affirmative Action Employer, promotes an equitable, creative, and robust scholarly environment by affirmatively recruiting a diverse group of students, faculty, and staff. We strongly encourage applications from underrepresented communities, women, candidates from all racial and ethnic backgrounds, LGBTQ persons, and individuals with disabilities, as well as those who bring unique perspectives and experiences. We also consider the needs of dual-career couples. Please send your cover letter, resume, and references to Professor Caprice Roberts, Appointments Chair, Savannah Law School.

September 30, 2013 in Legal Education, Tax, Tax Prof Jobs | Permalink | Comments (0)

TIGTA: IRS Violated Taxpayer's Rights in 16% of FOIA Requests

TIGTA The Treasury Inspector General for Tax Administration today released Fiscal Year 2013 Statutory Review of Compliance With the Freedom of Information Act (2013-30-109):

The IRS must ensure that the provisions of the Freedom of Information Act (FOIA), the Privacy Act of 1974 (Privacy Act), and Internal Revenue Code (I.R.C.) Section 6103 are followed. Errors can violate taxpayer rights and result in improper disclosures of tax information.

TIGTA is required to conduct periodic audits to determine if the IRS properly denied written requests for tax account information. ...  The overall objective of this review was to determine whether the IRS improperly withheld information requested in writing based on FOIA exemption (b)(3), in conjunction with I.R.C. § 6103, and/or FOIA exemption (b)(7) or by replying that responsive records were not available or did not exist.

TIGTA reviewed a statistically valid sample of 55 FOIA/Privacy Act information requests from a population of 3,415 FOIA/Privacy Act requests and found nine (16.4 percent) in which taxpayer rights may have been violated because the IRS improperly withheld or failed to adequately search for and provide information to requestors.


In addition, the IRS may have violated taxpayer rights by failing to adequately search for and provide information in three (5.6 percent) of 54 sampled I.R.C. § 6103 information requests. When the sample results are projected to their respective populations, approximately 559 FOIA/Privacy Act and 13 I.R.C. § 6103 information requests may have had information erroneously withheld. ... Additionally, sensitive taxpayer information was inadvertently disclosed in response to nine (16.4 percent) of the FOIA/Privacy Act and four (7.4 percent) of the I.R.C. § 6103 information requests reviewed.

September 30, 2013 in Gov't Reports, IRS News, Tax | Permalink | Comments (0)

The NYU Graduate Tax Program: A Tax Haven

NYU Tax LogoNYU Law Magazine, A Tax Haven:

Arthur Vanderbilt envisioned a formidable graduate tax program in 1945. Nearly 70 years later it remains the powerhouse platform for launching tax law careers in the nation’s top law firms and law schools, multinational corporations, and the US government.

September 30, 2013 in Legal Education, Tax | Permalink | Comments (0)

Johnson: IRS Regulation of Tax Return Preparation

Steve R. Johnson (Florida State), Loving and Legitimacy: IRS Regulation of Tax Return Preparation, 60 Vill. L. Rev. ___ (2013):

The validity of regulations promulgated by the Department of Treasury is a principal battleground in contemporary federal taxation. So far, the clash has had two phases: establishment and implementation. Phase one entailed the destruction of the citadel of tax insularity, the bastion within which tax specialists thought to keep themselves safe from having to learn and apply general administrative law. In cases such as Swallows, Mannella, Lantz, Mayo, and the welter of cases culminating in Home Concrete, the old guard was defeated. It is now firmly established that tax, no less than other regulatory areas, is subject to the rules of administrative law. That proposition having been settled, we are now in phase two: implementation, the application of specific administrative law rules in particular tax contexts.

September 30, 2013 in Scholarship, Tax | Permalink | Comments (0)

Gerzog: Graev and Conditional Facade Easements

Tax Analysys Logo (2013)Wendy C. Gerzog (Baltimore), Graev: Conditional Facade Easement, 140 Tax Notes 1607 (Sept. 30, 2013):

In Graev v. Commissioner, [140 T.C. No. 17 (June 24, 2013),] the Tax Court decided whether the taxpayers’ donations of a facade easement and cash contributions were conditional gifts and therefore disallowable as charitable deductions under the requirements of the regulations.

All Tax Analysts content is available through the LexisNexis® services.

September 30, 2013 in Scholarship, Tax | Permalink | Comments (0)

WSJ: Why Tough Teachers Get Good Results

Paper ChaseWall Street Journal, Why Tough Teachers Get Good Results:

It's time to revive old-fashioned education. Not just traditional but old-fashioned in the sense that so many of us knew as kids, with strict discipline and unyielding demands. Because here's the thing: It works. ... Studies have now shown, among other things, the benefits of moderate childhood stress; how praise kills kids' self-esteem; and why grit is a better predictor of success than SAT scores.

All of which flies in the face of the kinder, gentler philosophy that has dominated American education over the past few decades. The conventional wisdom holds that teachers are supposed to tease knowledge out of students, rather than pound it into their heads. Projects and collaborative learning are applauded; traditional methods like lecturing and memorization—derided as "drill and kill"—are frowned upon, dismissed as a surefire way to suck young minds dry of creativity and motivation.

But the conventional wisdom is wrong. And the following eight principles—a manifesto if you will, a battle cry inspired by my old teacher and buttressed by new research—explain why.

  1. A little pain is good for you
  2. Drill, baby, drill
  3. Failure is an option
  4. Strict is better than nice
  5. Creativity can be learned
  6. Grit trumps talent
  7. Praise makes you weak…
  8. …while stress makes you strong.

At their core is the belief, the faith really, in students' ability to do better. There is something to be said about a teacher who is demanding and tough not because he thinks students will never learn but because he is so absolutely certain that they will.

September 30, 2013 in Legal Education | Permalink | Comments (13)

Hurt: What Faculty Appointments Committees Say

From the keynote address by Christine Hurt (Illinois) at Arizona State's 5th Annual Aspiring Law Professors Conference on September 28:

September 30, 2013 in Legal Education | Permalink | Comments (0)

The IRS Scandal, Day 144

IRS Logo 2

USA Today op-ed:  IRS Scandal Means Bad News for Obama, by Glenn Harlan Reynolds (Tennessee):

So last week, while most of the country was talking about football or fears of a government shutdown, Rasmussen released a poll that should worry everyone -- but especially incumbent Democrats in Congress. According to Rasmussen's survey, most Americans think the IRS broke the law by targeting Tea Party groups for harassment, but few expect it to be punished. Fifty-three percent think the IRS broke the law by targeting the Tea Party and other conservative groups like the voter-integrity outfit True The Vote; only 24% disagreed. But only 17% think it is even somewhat likely that anyone will be charged, while 74% think that criminal charges are unlikely.

So a majority of Americans think that government officials who exercise an important trust broke the law, but only a very small number think anything will be done to punish them.

There are a couple of lessons to draw from this. One is bad for the country in general, but the other is bad for congressional Democrats.

The lesson for the country is that trust in the government is very low. ...

Meanwhile, there's another bit of bad news buried in that poll, this time for Democrats. The bad news is that a majority of Americans thinks the IRS broke the law even though the news media have consistently downplayed the scandal. But as the scandal has dragged on for months, word has filtered out anyway. Come 2014, the government's damaged brand will reflect poorly on members of the president's party, regardless of media efforts to protect them. Beyond that, the Wall Street Journal's James Taranto has begun calling President Obama "President Asterisk," saying that IRS efforts to weaken his opposition in the run-up to the 2012 election devalue Obama's victory the way illegal steroid use devalues an athlete's record-book standing.

Prior TaxProf Blog coverage:

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September 30, 2013 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

TaxProf Blog Weekend Roundup

Sunday, September 29, 2013

WSJ: Investors Face Long Odds in Qualifying for 'Trader' Status for Tax Purposes

Wall Street Journal Tax Report:  Are You a 'Trader' to Your Country?, by Laura Saunders:

Traders can realize many more tax breaks than mere investors—but a new ruling makes it harder to reach that exalted status.

For investors, it's a dream come true: Qualifying as a "trader" under the tax code brings wondrous benefits.

Expenses such as margin interest, home-office costs and continuing education can become fully deductible; otherwise, they are not deductible or subject to high hurdles. Both payroll taxes and the alternative minimum tax often are lower, and it might be possible to use trading losses to shelter more than $3,000 a year of ordinary income—such as interest or wages—which is the limit for most people.

Traders, according to tax rules, must "seek to profit from daily market movements" and trading must be substantial, continuous, and regular, among other requirements.

For many investors, though, achieving trader status is all too elusive—as a recent taxpayer loss in U.S. Tax Court shows. The case, Thomas A. Endicott v. Commissioner, [T.C. Memo. 2013-199 (Aug. 28, 2013),]  is now part of "a long line of decisions showing the near-impossibility of attaining trader status," says Robert Willens, an independent tax specialist in New York.

September 29, 2013 in IRS News, Tax | Permalink | Comments (0)

Top 5 Tax Paper Downloads

SSRN LogoThere is a bit of movement in this week's list of the Top 5 Recent Tax Paper Downloads, with a new paper debuting on the list at #1:

September 29, 2013 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

40 Things Every Self-Respecting Man Over 30 Should Own

40 Things Every Self-Respecting Man Over 30 Should Own:  What does it mean that I only own 32 of them? Do I really need one of these?  (Hat Tip:  Glenn Reynolds.)

September 29, 2013 in Legal Education, Tax | Permalink | Comments (5)

The IRS Scandal, Day 143

Prior TaxProf Blog coverage:

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September 29, 2013 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Saturday, September 28, 2013

Fleischer Presents The Inferiority of Pigouvian Taxes at Loyola-L.A.

Fleischer Vic (2013)Victor Fleischer (San Diego) presented The Inferiority of Pigouvian Taxes at Loyola-L.A. yesterday as part of its Faculty Workshop Series:

Pigouvian (or "corrective") taxes have become the favored policy instrument to address activities that cause negative externalities. There is considerable academic support for Pigouvian taxes on a wide range of products and activities, including carbon, gasoline, fat, high fructose corn syrup, financial transactions, executive pay, excessive zoning, and SUVs. Economists of all political stripes are therefore mystified by our politicians’ collective inability to see the merits of using Pigouvian taxes more frequently to address serious social harms.

Like the nearsighted Mr. Magoo, the politicians have stumbled to the right place. The problem with Pigouvian taxes is that the theoretical advantages of tax as an instrument of social engineering do not survive the journey from academic theory into actionable policy. The problem is that we typically cannot tax and thereby reduce the harmful externality directly, but rather must find a proxy activity to tax that we believe, if reduced, will also reduce harm. In the case of a carbon tax, there is a proxy (carbon production) for the harm (carbon emission) that fits well. But when there is great variation in the amount of harm caused by different individuals or firms that engage in the activity, a uniform excise tax harm will not achieve the desired marginal effect. This heterogeneity or “targeting” problem has not been adequately addressed in the literature.

The targeting problem results from how our political institutions work rather than from the economics of tax instruments as such. In a world with costless information and perfect political institutions working in the public interest, Pigouvian taxes would not be uniform. They could be varied with a level of precision that allows the benefits of reducing externalities to more than offset any deadweight losses associated with poor targeting. Except in the case where the variation among externality producers is related to income, however, the taxing authorities will not be well positioned to design or implement a tax, and other policy instruments (regulation, government spending, behavioral nudges, education, private insurance) are likely to achieve better results at lower cost.

September 28, 2013 in Colloquia, Scholarship, Tax | Permalink | Comments (1)

Oklahoma City Hosts Conference Today on Wills, Trusts & Estates Meets Gender, Race & Class

OCUOklahoma City University School of Law hosts a conference today on Wills, Trusts & Estates Meets Gender, Race & Class:

[The conference] will bring the insights of progressive property theory to the area of inheritance and succession law and will address the many points of intersection between inheritance law, gender and race, social structure, wealth inequality, domestic violence, and indigenous people’s rights, among others. Recognizing that inheritance law is a society’s DNA, the conference will present both theoretical, historical and practical approaches to ways it has and continues to maintain social structure and ways it can change it.

  • Keynote Address:  Al Brophy (North Carolina), Commentator: William P. LaPiana (New York Law School)
  • Panel #1:  A Critical Trusts and Estates Research Agenda:  Anthony Infanti (Pittsburgh), Bridget Crawford (Pace)
  • Panel #2:  Class Matters:  Naomi Cahn (George Washington), Phyllis Smith (Florida A&M), Palma Strand (Creighton), Lee-Ford Tritt (Florida)
  • Panel #3:  Past and Present:  Steven Clowney (Kentucky), Stuart Gold (Partner, Mandelbaum Salsburg, West Orange, NJ), Casey Ross-Petherick (Oklahoma City), Kent Schenkel (New England)
  • Panel #4:  Formalities and Language:  Deborah Gordon (Drexel), Anne Marie Rhodes (Loyola-Chicago), Karen Sneddon (Mercer),
  • Panel #5:  Families and the Home:  Shelly Kreiczer-Levy (Academic Center of Law and Business, Tel Aviv, Israel), Browne Lewis (Cleveland State), Alan Oxford (Appalachian), Danaya Wright (Florida)

September 28, 2013 in Legal Education, Scholarship, Tax, Tax Conferences | Permalink | Comments (1)

NY Times: The Estate Tax Value of Unique Assets

BothNew York Times:  Putting an Estate Value on the Assets Unique to You, by Paul Sullivan:

Michael Jackson and J. D. Salinger would seem to have had little in common beyond being famous, reclusive (to different degrees) and the subject of much speculation about their personal lives. But in death the King of Pop and the author of “The Catcher in the Rye” have become sources of fascination and speculation among estate lawyers and the people charged with putting a price on hard-to-value assets, like royalties that continue paying after they are gone.

Mr. Jackson, who died in June 2009, had revenue from his songs and his share in a music catalog; Mr. Salinger, who died in January 2010, had the royalty income from his books, which continue to be read and taught in schools.

But the speculation arises over what may not have been known or calculated at the time of their deaths. Mr. Jackson’s death was good for his earning potential — his estate now receives hundreds of millions of dollars a year, according to an analysis by Forbes. As for Mr. Salinger, a new documentary film claims that he had five finished manuscripts that will be published starting in 2015 and are likely to sell well.

In both instances, it would have been hard to know the value of those assets when their creators died, particularly in Mr. Jackson’s case. He had not had a successful record in many years, and the value of the record catalog was lower at the end of the recession than it is today. But trying to divine such values, however difficult, is an important part of settling any estate and avoiding the ire of the IRS. It also applies more broadly than many people think. ...

Property like a privately held small business, a big art collection, a share in rental properties or intellectual property like television or movie credits, patents or even Web site domain names are not as easy to value as, say, a stock portfolio.

Executors of estates for people who owned small businesses, particularly in service areas like law, accounting or medicine, where the revenue is reliant upon the owner, often face the opposite problem of the Salinger and Jackson estates: the values plummet when their owners are gone, but the I.R.S. still assesses a tax on the value at the date of death.

September 28, 2013 in Tax | Permalink | Comments (0)

The IRS Scandal, Day 142

Friday, September 27, 2013

Weekly Tax Roundup

Weekly SSRN Tax Roundup


September 27, 2013 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)

Weekly Student Note Tax Roundup

WSJ: What's Wrong With Wharton?

Wharton LogoWall Street Journal:  What's Wrong With Wharton? Business-School Experts and Students Say School Has Lost Its Luster:

Something at Wharton doesn't add up.

Applications to the University of Pennsylvania's business school have declined 12% in the past four years, with the M.B.A. program receiving just 6,036 submissions for the class that started this fall. That was fewer than Stanford Graduate School of Business, with a class half Wharton's size. ...

But business-school experts and b-school applicants say Wharton has lost its luster as students' interests shift from finance to technology and entrepreneurship.

"We're hearing [applicants say] Stanford, Harvard or nothing. It used to be Stanford, Harvard or Wharton," says Jeremy Shinewald, the founder of mbaMission, an admissions advisory firm.

Wharton over the past century built its reputation as a training ground for Wall Street titans, but the financial crisis closed off many paths to such careers. The school in the mid-2000s regularly sent more than a quarter of its students to jobs at investment banks and brokerage firms. That figure has slid into the teens. ... Some admissions advisers and Wharton professors say the school didn't react aggressively enough when the spigot of finance jobs was turned off and that recent moves, such as a rebranding campaign begun in the spring of last year, did little to clarify the school's profile.


September 27, 2013 in Legal Education | Permalink | Comments (1)

Bird-Pollan Presents Nozick, Libertarianism, and the Estate Tax Today at Florida

Bird-PollanJennifer Bird-Pollan (Kentucky) presents Nozick, Libertarianism, and the Estate Tax today at the University of Florida College of Law Graduate Tax Program Tax Colloquium:

Contemporary policy discussions of taxes in general, and of the estate tax in particular, are often dominated by arguments that start from libertarian premises. However, these libertarian views are rarely fully unpacked, and, as a result, the conclusions of these arguments often extend beyond what can be justified by those libertarian premises. With regard to the estate tax, many libertarians argue that government interference with the free transfer of assets after death is an immoral violation of the property rights of the deceased. In this Article, I work through the libertarian arguments of Robert Nozick in his seminal book, Anarchy, State, and Utopia, with special attention to his views of property and inheritance rights. By demonstrating that libertarianism cannot justify property rights that extend beyond death, I show that, in fact, libertarianism is entirely consistent with a robust estate tax. While this does not mean that the libertarian views of property rights require an estate tax, those views do not, on moral grounds, preclude the imposition of the tax.

September 27, 2013 in Colloquia, Scholarship, Tax | Permalink | Comments (1)

Tax Analysts Hosts Conference Today on Private Equity as a Trade or Business: The Sun Capital Decision

Tax AnalystsTax Analysts hosts a roundtable discussion on Private Equity as a Trade or Business: The Sun Capital Decision at the National Press Club in Washington, D.C. today at 3:00 - 5:00 p.m. EST:

Please join us for a roundtable discussion in which we will debate the tax implications of the "trade or business" analysis in the recent Sun Capital court decision.

  • Christopher E. Bergin (President and Publisher, Tax Analysts)
  • Patrick B. Fenn (Partner, Akin Gump Strauss Hauer & Feld, Washington, D.C.)
  • John C. Hart (Partner, Simpson Thacher & Bartlett, New York)
  • Steven M. Rosenthal (Visiting Fellow, Urban-Brookings Tax Policy Center)
  • Stephen E. Shay (Professor of Practice, Harvard Law School)
  • Lee A. Sheppard (Contributing Editor, Tax Analysts)

September 27, 2013 in Scholarship, Tax, Tax Conferences | Permalink | Comments (0)

Villanova Hosts Symposium Today on Selective Issues in Tax Administration

Villanova Law LogoThe Villanova Law Review hosts a symposium today on Selective Issues in Tax Administration:

Introductory Remarks:  Joy Mullane (Villanova)

Panel #1:  The Increasing Importance of the Whistleblower Provisions in U.S. Tax Administration

  • J. Richard “Dick” Harvey (Villanova) (moderator)
  • Jeremiah Coder (Greenberg Traurig, McLean, VA)
  • Dennis J. Ventry, Jr. (UC-Davis)
  • Dean A. Zerbe (Zerbe, Fingeret, Frank & Jadav; Counsel to National Whistleblower's Center)

Panel #2:  The IRS’s Efforts to Regulate Unlicensed Tax Return Preparers

  • Leslie Book (Villanova) (moderator)
  • Dan Alban (Institute for Justice)
  • Michelle L. Drumbl (Washington & Lee)
  • Lawrence B. Gibbs (Miller Chevalier, Washington, D.C.)
  • Steve R. Johnson (Florida State)

Keynote Address:  Kathryn Keneally (Assistant Attorney General (Tax), U.S. Department of Justice), The View From the Department of Justice

Panel #3:  Criminal Tax Sentencing: Fairness and Deterrence

  • Peter Hardy (Post & Schell, Pittsburgh) (moderator)
  • Steve Chanenson (Villanova)
  • Caroline D. Ciraolo ( Rosenberg Martin Greenberg, Pittsburgh)
  • Kathryn Keneally (Assistant Attorney General (Tax), U.S. Department of Justice)
  • Scott Schumacher (University of Washington)
  • John Townsend (Townsend & Jones, Houston)

September 27, 2013 in Scholarship, Tax, Tax Conferences | Permalink | Comments (0)

Weiser: Five Initiatives That Legal Education Needs

Legal RebelsABA Journal Legal Rebels:  Five Initiatives That Legal Education Needs, by Phil Weiser (Dean, Colorado):

The upside of today’s New Normal is that law schools have the opportunity to develop a new generation of lawyers who are more purposeful than ever before about how to develop and navigate their careers. These graduates will be legal entrepreneurs. By that, I mean lawyers—whether working in government, nonprofits, law firms, consulting firms, or businesses—who take ownership of their career paths and develop the tool kit necessary to add value and succeed wherever they work. Developing legal entrepreneurs, however, requires a commitment to innovation and experimentation that until recently has not been traditionally associated with legal academia. To underscore the range of emerging innovations needed in legal academia, consider the following five initiatives now taking place in legal education:

  1. Build an entrepreneurial mindset
  2. Challenge employers on entry-level hiring
  3. Compress law school education and couple with experience
  4. Provide multidisciplinary training
  5. Engage with the community.

Experimentation, innovation, and the New Normal.
In 2008, most law school deans were living in the Old Normal. Today, all law school deans know that they are in a New Normal. The reality is that the shaping of today’s environment took place over a long period of time, even if we did realize it while it was happening. As such, developing a new model will not happen overnight. But momentum is building. The broad outlines of the New Normal—the need for a more entrepreneurial mindset, more community engagement, more multidisciplinary training, and new (and nontraditional) employment pathways—are now taking shape through experiments all over the country. The exciting part of this emerging paradigm is that it is still very much a work in progress, and law schools have the opportunity to develop creative partnerships and innovations to support our students in a changing and challenging environment.

September 27, 2013 in Legal Education | Permalink | Comments (2)

Walker: Bramble Bush Revisited: Karl Llewellyn, the Great Depression, and the First Law School Crisis, 1929-1939

Anders Walker (Saint Louis), Bramble Bush Revisited: Karl Llewellyn, the Great Depression, and the First Law School Crisis, 1929-1939:

This article recovers the plight of legal education during the Great Depression, showing how debates over practical training, theoretical research and the appropriate length of law school all emerged in the 1930s. Using Bramble Bush author Karl Llewellyn as a guide, it strives to make three points. One, Depression-era critics of law school called for increased attention to practical skills, like today, but also a more inter-disciplinary curriculum – something current reformers discount. Two, the push for theoretical, policy-oriented courses in the 1930s set the stage for claims that law graduates deserved more than a Bachelor of Laws degree, bolstering the move away from a two year LL.B. and towards a mandatory three year Juris Doctor, or J.D. The rise of the J.D. following World War II, this article concludes, heightened the role of inter-disciplinary work in the first three years, even as it substantially diminished the role of advanced, graduate-level research, a point worth recalling as law school reformers, the ABA and, even the President of the United States lobby for shorter, more-practice oriented programs. While such proposals may be prudent, they may also warrant a return to plural law degrees.

September 27, 2013 in Legal Education | Permalink | Comments (1)

The IRS Scandal, Day 141

IRS Logo 2

Prior TaxProf Blog coverage:

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September 27, 2013 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Thursday, September 26, 2013

Iowa Shrinks 1L Class by 40%, to 94 Students

Iowa LogoThe Daily Iowan, Inside Higher Ed, and Lawyers. Guns & Money discuss the dramatic reduction in the size of the entering 1L class at the University of Iowa College of Law (ranked #26 overall and #28 in academic peer reputation in the 2014 U.S. News Law School Rankings):

2010:  203
2011:  180
2012:  155
2013:  94

Update: Above the Law, Second-Tier Law Schools Shrink As They Stubbornly Keep Tuition High

September 26, 2013 in Legal Education | Permalink | Comments (17)

Morse Presents Startup Ltd.: Tax Planning and Initial Incorporation Location Today at University of New South Wales

Morse (2013)Susan C. Morse (Texas; Atax Fellow, University of New South Wales School of Taxation and Business Law) presents Startup Ltd.: Tax Planning and Initial Incorporation Location, 14 Fla Tax Rev. ___ (2014), today at the University of New South Wales School of Taxation and Business Law:

This Article analyzes the incorporation decisions of relatively new, U.S.-based private business enterprises with global ambitions. Such startup firms generally organize as U.S. corporations. This Article theorizes this dominant structure and its exceptions, drawing from prior literature and illustrating with informal interview results. It identifies explanatory factors including limited tax benefits of non-U.S. incorporation, legal benefits of U.S. incorporation, startups’ liquidity and other resource constraints, and investor preferences.

September 26, 2013 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Haile: Disruptive Technology: The Tax Injunction Act

HaileAndrew J. Haile (Elon), Disruptive Technology: The Tax Injunction Act:

In March 2012, a federal district court in Colorado permanently enjoined the state’s attempt to improve its use tax collections on internet sales to Coloradans. Last month, the Tenth Circuit reversed that decision on grounds that (almost) no one predicted, holding that the district court did not properly hear the case to begin with on account of the Tax Injunction Act. Given the ever-expanding role of e-commerce in our economy, the ability of states to collect use tax has a significant impact on much-needed tax revenues. Moreover, the case in question (Direct Marketing Association v. Brohl) raises the important issue of when the Tax Injunction Act applies, with the Tenth Circuit giving a relatively broad answer to this question.

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September 26, 2013 in Scholarship, Tax | Permalink | Comments (0)

Gergen: Tax Law Influences on the Form and Substance of Equity Compensation

Mark P. Gergen (UC-Berkeley), Tax Law Influences on the Form and Substance of Equity Compensation in the United States:

This brief essay was written for a forthcoming book by Prof. Zenich Shisido, Enterprise Law: Contracts, Markets, and Laws in the US and Japan (Edward Elger). It summarizes recent scholarship on the influence of tax law on equity compensation in the United States.

The essay finds there is little evidence or reason to believe that tax law significantly influences the substance of equity compensation, meaning the mix between equity and cash compensation and the risk and term structure of equity compensation. For publicly traded firms, tax law generally and roughly is neutral in the choice between equity and cash compensation once costs and benefits to both the firm and the recipient are considered. Tax law probably also has not had much impact on the form of equity compensation in publicly traded firms.

Tax considerations do seem to have had an impact on the form of equity compensation in the venture capital (“VC”) and private equity industries both at the start-up company level and at the fund level. There is an arguable tax bias against giving founders equity compensation in the form of founders’ common in start-ups in the VC industry. And there is arguable tax bias in favor of giving fund managers equity compensation in the form of a profits interest in the private equity industry, which includes the VC industry.

But there are reasons to be skeptical about whether these tax biases have had much of an impact on the substance of equity compensation. Start-ups are so poorly engineered from a tax perspective that it is unlikely that tax considerations significantly influence the economic deal struck between founders and investors. If the tax cost of founders’ common was perceived as an impediment to using equity compensation, then the parties would redesign the deals to eliminate those costs. On the other hand, funds are so exquisitely well engineered from a tax perspective that that we can expect engineers to design around any tax rules that are more than a minor irritant. The co-existence of these poorly and exquisitely designed structures in the same industry is curious.

September 26, 2013 in Scholarship, Tax | Permalink | Comments (0)

More Law School Dean Data

OfficeFollowing up on yesterday's post, Law School Deans Database:  National Law Journal, Yale Beats Harvard — in Producing Law School Deans:

When it comes to churning out law deans, Yale Law School has a slight edge over Harvard Law School, having educated 26 of the deans serving now compared to 23 who passed through Harvard. That's one of the tidbits Mississippi College School of Law Dean Jim Rosenblatt dug up in the process of creating an online repository of information about law deans, which he calls Rosenblatt's Deans Database. ...

Rosenblatt found plenty of other interesting statistics, including that the longest-serving dean is John O'Brien of the New England School of Law, who's been in the job more than 25 years. The average tenure for sitting law deans is slightly more than four years and the median tenure 3.24 years.

The online database allows users to search in a variety of ways and includes some presorted data points, like which schools have produced the most sitting deans.

September 26, 2013 in Legal Education | Permalink | Comments (0)

Hickman Reviews Mason's Delegating Up: State Conformity with the Federal Tax Base

JotwellKristin E. Hickman (Minnesota), Recognizing and Rethinking Federal-State Tax-Base Conformity (Jotwell), reviewing Ruth Mason (Virginia), Delegating Up: State Conformity with the Federal Tax Base, 62 Duke L.J. 1267 (2013):

Tax policy ranks among the more heated issues in modern politics.  Politicians argue a lot about what rates to apply to which taxpayers, but the tax policy debate is not limited to tax rates.  It is strange, therefore, just how little state individual income tax regimes differ from their federal counterpart.  State tax laws tweak the federal model here and there around the edges, but in the main, all of the states that impose a broad-based income tax rely either explicitly or implicitly on federal tax laws to define their tax base.  In her thoughtful article, Delegating Up: State Conformity with the Federal Tax Base, Ruth Mason thoroughly documents and persuasively challenges federal and state lawmakers to think more carefully about the consequences of this phenomenon. ...

Mason proposes several incremental strategies at both the federal and state levels to ameliorate the disadvantages of federal-state tax conformity.  For example, she proposes that states increase public awareness by publishing annual tax expenditure budgets, reduce revenue volatility through static rather than dynamic incorporation of federal tax laws, or at least starting their tax liability calculations with federal adjusted gross income rather than federal taxable income.  She encourages Congress to pay more attention to the effect of federal tax law changes on states and to simply produce a list of changes each year to facilitate the ability of state lawmakers to adopt corresponding changes as needed.  Mason also calls for more consideration of the effects of federal-state tax-base conformity in ongoing debates over federal tax policy and for more research into the nature and scope of those effects.  Whether or not lawmakers and scholars heed her call, she has firmly established the case that they should.

September 26, 2013 in Scholarship, Tax | Permalink | Comments (0)

Rosenthal: Private Equity Is a Business: Sun Capital and Beyond

Tax Analysys Logo (2013)Steven M. Rosenthal (Tax Policy Center), Private Equity Is a Business: Sun Capital and Beyond, 140 Tax Notes 1459 (Sept. 23, 2013):

Private equity has grown exponentially: it now controls and operates a large number of the companies in our economy. But private equity is just that: private. Its operations are confidential and difficult to parse. This article attempts to demystify the business of private equity. It also describes the unanimous decision by the 1st Circuit that a private equity fund is a trade or business for purposes of ERISA. Finally, the article discusses the tax implications of "trade or business" status for private equity funds and recommends further guidance from Treasury.

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September 26, 2013 in Scholarship, Tax | Permalink | Comments (2)

Oei: Taxing Bankrupts

Shu-Yi Oei (Tulane), Taxing Bankrupts, 55 B.C. L. Rev. ___ (2014):

When a debtor goes bankrupt and limited assets have to be divided between competing creditors, should unpaid taxes owed to the government be paid before the debts owed to other creditors? While the contemporary trend has been towards a reduction of such "priority" for tax debts in bankruptcy, this Article defends the award of tax priority. Insofar as bankruptcy protection transfers the risk of financial distress from a debtor to her creditors, the tax priority debate should be understood as a fight about how much debtor default risk the government should have to assume relative to other creditors. This Article argues that the government’s share of debtor default risk should be limited through the grant of tax priority because, contrary to the claims of priority’s critics, the government is constrained in its ability to diversify against such risk, via either substantive tax policy or changes in tax administration. Therefore, greater bankruptcy risk exposure can compromise the government’s ability to perform other important functions. In sum, tax priority serves as an important structural limit on the government’s bankruptcy risk burden and safeguards the myriad important functions of government.

September 26, 2013 in Scholarship, Tax | Permalink | Comments (2)

State Tax Revenues Surge, Hit Record High

The IRS Scandal, Day 140

Wednesday, September 25, 2013

IRS Relies on 1884 'Dead Horse' Statute to Justify Takeover of Tax Return Preparer Industry

RTRPReuters, IRS Rides 1884 'Dead Horse' Law to Defense of Tax Preparer Rules:

The Obama administration on Tuesday defended its effort to regulate the tax return preparation business for the first time in U.S. history, basing its case largely on a 19th century law dealing with horses lost or killed in the Civil War.

At an appellate court hearing on a challenge brought by libertarian lawyers challenging the administration, Justice Department Tax Division lawyer Gilbert Rothenberg said: "I hate to beat a dead horse, especially one from the Civil War era."

But he explained that the administration sees the "Horse Act of 1884" as providing ample authority for the IRS to regulate the tens of thousands of preparers who fill out millions of Americans' federal tax returns.

A three-judge panel of the U.S. Court of Appeals for the District of Columbia Circuit heard the administration's argument. Rothenberg said the IRS should be allowed to force tax return preparers -- who are now unregulated -- to pass a competency test and take annual continuing education classes.

But the Institute for Justice, a libertarian advocacy law firm, disagreed. "Congress never gave the IRS authority to regulate tax preparers," said Dan Alban, an attorney for the institute.

The case has broad implications for the industry, which includes H&R Block Inc, a few mid-tier companies and thousands of tiny, mom-and-pop firms.

A decision from the judges is still months away. In oral arguments, the judges -- all appointed by Republican presidents -- gave no clear sign of how they will rule, yea or neigh. But they did question why the IRS was citing an 1884 law to justify trying to police tax return preparers in 2013.

The Foundry, D.C. Circuit Signals Doubts on IRS Tax Preparer Regulations:

In oral argument today, the D.C. federal appeals court appeared ready to throw cold water on the IRS’s claim to have the authority to regulate income tax return preparers under a 130-year-old statute. The case is just the latest to arise following President Obama’s push for the executive branch to take more and bolder actions without seeking congressional authorization. ...

If oral argument is any indication, the court will likely find that the statute simply does not give the IRS the authority to regulate the enormous class of preparers, and if the reasons for doing so were as strong as the agency claims, it should have sought authorization from Congress—just as the Constitution requires.

Tax Update Blog, Preparer Regulation Has a Bad Day in Court:

Tax Analysts reports ($link) that the judges hearing the IRS appeal of the D.C. District Court’s shutdown of Doug Shulman’s preparer regulation power grab do not appear inclined to reverse it:

The D.C. Circuit during September 24 oral arguments in Loving v. IRS, No. 13-5061 (D.C. Cir. 2013), expressed skepticism that the IRS possesses the statutory authority to implement its tax return preparer program. Stuart J. Bassin of Baker & Hostetler LLP said that the oral arguments did not go well for the government and that it didn’t appear as if the court was “buying what the government was selling.”

Prior TaxProf Blog coverage:

(Hat Tip: Mike Lang.)

September 25, 2013 in IRS News, Tax | Permalink | Comments (8)

Levmore Presents Regulatory Intensity, Information Revelation, and Internalities Today at Columbia

LevmoreSaul Levmore (Chicago) presents From Helmets to Savings and Inheritance Taxes: Regulatory Intensity, Information Revelation, and Internalities at Columbia today as part of its Tax Policy Colloquium Series hosted by Alex Raskolnikov, David Schizer, and Wojciech Kopczuk:

It seems obvious that regulation requires the revelation of private information, because legal interventions can do harm when they are designed with insufficient information about individuals’ preferences and other variables. Nevertheless, academic observers and lawmakers often identify a market failure or constituent need, and then proceed to favor a specific legal intervention as if its intensity were of little significance. The right intensity, or even a level that does more good than harm, can be difficult to determine. It is apparent that regulation is more likely to improve social welfare when its intensity reflects accurate information about the costs and benefits it generates. At the same time, if revelation imposes emotional or other costs, then welfare can be improved if law camouflages true preferences.

Continue reading

September 25, 2013 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Let's Have Dinner and Talk About Death

DeathBloomberg:  Death Dinners at Baby Boomers’ Tables Take on Dying Taboo:

Over the past month, hundreds of Americans across the country have organized so-called death dinners, designed to lift the taboo around talking about death in hopes of heading off conflicts over finances and medical care -- and avoiding unnecessary suffering at the end of life. It’s a topic that is resonating as baby boomers, born from 1946 to 1964, deal with the passing of their parents, even as they come face-to-face with their own mortality. 

About 70 percent of adults don’t have a living will, a legal document detailing the medical interventions they’d want or not want if unable to communicate, according to the Pew Research Center. As many as 30 percent of Americans 65 and older don’t have a will detailing what should happen with their assets, a Pew survey found. If those discussions don’t happen ahead of an illness or death, it can leave family members conflicted over what to do.

“Having family infighting is horrific,” said Dianne Gray, president of the Elizabeth Kubler-Ross Foundation, a nonprofit focused on end-of-life issues. “No parent wants their legacy to be that at the end of their life they created a family divided.”

For the generation that brought on the sexual revolution, led the anti-war movement and turned their midlife crises into a time for reinvention and self-improvement, baby boomers are trying now to have it their way right to the very end. ...

[Death Dinners] are happening largely thanks to a group of master’s degree students and faculty at the University of Washington, who have started a program called “Let’s Have Dinner and Talk About Death.” It offers talking points, reading material on death, and how to word a death dinner invitation. Since starting last month, about 400 people have signed up to host dinners, the group said.

September 25, 2013 in Tax | Permalink | Comments (0)

First Circuit Ruling Threatens Tax Foundation of Private Equity Industry

Bloomberg:  Carried-Interest Break Seen at Risk After Court’s Ruling, by Richard Rubin:

A federal court ruling that’s captured the attention of the private equity world and U.S. government officials has the potential to undercut the legal tax foundation of the buyout industry.

The ruling, in a pension-law case involving Sun Capital Partners Inc., determined that private-equity funds were engaged in a “trade or business” and weren’t merely passive investors who could back out of pension-funding liabilities.

If courts or regulators apply that logic to the U.S. tax code, the changes could jeopardize the structure of the industry by altering some core benefits of private equity. Those are low-taxed carried interest for fund managers, tax-free income for universities and an exemption from U.S. taxes for foreign investors. ...

The court case poses a significant challenge to private equity, beyond the often-discussed proposals from President Barack Obama and other Democrats to raise taxes on fund managers’ carried interest -- a push that has foundered for six years in Congress.

So far, the Treasury Department and the Internal Revenue Service have been cautious in reacting to the legal ruling, saying publicly only that they’re looking at the issue carefully.

Prior TaxProf Blog coverage:

September 25, 2013 in Tax | Permalink | Comments (1)

Applications Surge in Full-Time MBA Programs

2013-app-trends-survey-report_Page_01Graduate Management Admissions Council, 2013 Applications Trends Survey:

The 2013–2014 academic year represents the second consecutive year of increased application volume for full-time MBA programs, signaling a rebound in applicant demand for full-time MBA study. With more than half of full-time two-year (54%) and full-time one-year (53%) MBA programs reporting increased or stable application volumes in 2013, the situation is much improved over the past two years. This year’s survey results show growth in the proportion of programs with increasing volumes that are edging closer to levels reported by full-time programs in 2009 (Figure 1).


September 25, 2013 in Legal Education | Permalink | Comments (0)

The IRS Scandal: Rearranging the Deck Chairs on the Titanic

Tax Analysys Logo (2013)Alan J. Wilensky (Attorney, Minneapolis), Scandal at the IRS: Rearranging the Deck Chairs on the Titanic, 140 Tax Notes 1449 (Sept. 23, 2013):

This article discusses the IRS’s recent problems in the exempt organizations area. It recommends that these and other problems the agency has had since the enactment of the IRS Restructuring and Reform Act of 1998 be studied in detail by a bipartisan panel. It also suggests that the notion of having professional managers head the agency, rather than tax professionals, decreased the sense of duty to the tax system that has been critical to the organization’s historically high ethical and cultural standards.

All Tax Analysts content is available through the LexisNexis® services.

September 25, 2013 in IRS News, IRS Scandal, Tax, Tax Analysts | Permalink | Comments (2)

Law School Deans Database

OfficeJim Rosenblatt, Dean of Mississippi College of Law, has launched a very helpful Law School Deans Database:

Welcome to Rosenblatt's Deans Database (RDD)
This site provides information about law school deans. Ever wondered who is the longest serving dean? Which current dean has held the most deanships? How many deans were former law professors or judges? What schools a dean attended? Who were the former deans at a particular law school?

The RDD is designed to answer these questions and to provide information to those who take an interest in law school deanships. This database may be used by dean search committees, university officials, or members of the public and is available without charge.

An exciting feature of the RDD is that it is always current. Unlike printed lists of deans that go out of date quickly when changes occur, the RDD can be updated by individual law schools the instant a change occurs. These updates are immediately shown on the RDD. ...

Law schools are encouraged to review their entries and keep them up to date. Only the dean of a law school or the dean’s designee can enter or modify information about that dean or that law school. Each law school has a distinct password that allows them entry and protects their information.

(Hat Tip: Brian Leiter.)

September 25, 2013 in Legal Education | Permalink | Comments (0)

Ferraro 500: Uncertain Tax Positions

Fortune 500The Ferraro Law Firm has released the 2013 edition of the Ferraro 500 - Uncertain Tax Positions:

We released the Ferraro 500 today.  The Ferraro 500 is a reorganization of the Fortune 500 by the size of the companies' Unrecognized Tax Benefit reserve ("Tax Reserve") for uncertain tax positions reported in SEC filings. The 2013 Ferraro 500 showed that collectively the Fortune 500 companies believe that they have underpaid their corporate income tax by $191.7 billion, an increase of 2.2% from the group’s collective tax reserves last year. According to the Ferraro 500, 2012 saw a slight decrease (-.51%) in the profits of the Fortune 500.

Ferraro 500 Rank (+/- Change) Company Fortune 500 Rank 2012 Revenues
($ billions)
2012 Profits
($ millions)
2012 Tax Reserves
($ millions)
2011 Tax Reserves
($ millions)
% Change
1 (+7) Exxon Mobil 2 449.9 44,880.0 7,663.0 4,922.0 55.7%
2 (+1) Microsoft 35 73.7 16,978.0 7,202.0 6,935.0 3.9%
3 (-1) J.P. Morgan
18 108.2 21,284.0 7,158.0 7,189.0 -0.4%
4 (0) General Electric 8 146.9 13,641.0 6,579.0 6,384.0 3.1%
5 (-4) Pfizer 48 61.2 14,570.0 6,315.0 7,309.0 -13.6%
6 (+1) Wells Fargo 25 91.2 18,897.0 6,069.0 5,005.0 21.3%
7 (-2) AT&T 11 127.4 7,264.0 5,770.0 5,853.0 -1.4%
8 (-2) IBM 20 104.5 16,604.0 5,672.0 5,575.0 1.7%
9 (+1) Merck 58 47.3 6,168.0 4,425.0 4,277.0 3.5%
10 (-1) AIG 38 70.1 3,438.0 4,385.0 4,279.0 2.5%
11 (+37) Entergy 261 10.3 846.7 4170.4* 812.1 413.5%
12 (0) Morgan Stanley 96 32.4 68.0 4,065.0 4,045.0 0.5%
13 (-2) Bank of America
21 100.1 4,188.0 3,677.0 4,203.0 -12.5%
14 (+1) Oracle 80 37.1 9,981.0 3,276.0 3,160.0 3.7%
15 (-2) Citigroup 26 90.8 7,541.0 3,109.0 3,923.0 -20.7%
16 (-2) Chevron 3 233.9 26,179.0 3,071.0 3,481.0 -11.8%
17 (+1) J&J 41 67.2 10,853.0 3,054.0 2,699.0 13.2%
18 (-2) Verizon
16 115.8 875.0 2,943.0 3,078.0 -4.4%
19 (-2) Cisco 60 46.1 8,041.0 2,819.0 2,948.0 -4.4%
20 (-1) General Motors 7 152.3 6,188.0 2,745.0 2,370.0 15.8%
21 (+3) Hewlett-Packard 15 120.4 -12,650.0 2,573.0 2,118.0 21.5%
22 (-2) Dell 51 56.9 2,372.0 2,446.0 2,194.0 11.5%
23 (-2) Pepsi 43 65.5 6,178.0 2,425.0 2,167.0 11.9%
24 (-2) Abbott Labs 70 39.9 5,962.9 2,257.0 2,123.0 6.3%
25 (0) Goldman Sachs
68 41.7 7,475.0 2,237.0 1,887.0 18.5%
26 (-3) Time Warner 105 28.7 3,019.0 2,222.0 2,122.0 4.7%
27 (+5) Apple 6 156.5 41,733.0 2,062.0 1,375.0 50.0%
28 (+1) Google 55 52.2 10,737.0 1,933.0 1,564.0 23.6%
29 (+1) Energy Future
447 5.6 -3,360.0 1,788.0 1,779.0 0.5%
30 (-4) P&G 28 85.1 10,756.0 1,773.0 1,848.0 -4.1%
31 (0) Comcast 46 62.6 6,203.0 1,573.0 1,435.0 9.6%
32 (-5) Ford 10 134.3 5,665.0 1,547.0 1,818.0 -14.9%
33 (0) Johnson Controls 67 42.0 1,226.0 1,465.0 1,357.0 8.0%
34 (+1) Eli Lilly 130 22.6 4,088.6 1,433.8 1,274.8 12.5%
35 (+1) Am Express 90 33.8 4,482.0 1,230.0 1,223.0 0.6%

September 25, 2013 in Tax | Permalink | Comments (0)

Blackman & Stark: State Charitable Tax Credits Could Increase Federal Funding for California

Phillip C. Blackman (Penn State) & Kirk J. Stark (UCLA), Too Good to Be True? How State Charitable Tax Credits Could Increase Federal Funding for California:

An IRS chief counsel memorandum published in 2010 found that a taxpayer was permitted to claim a charitable contribution deduction for the full amount of a gift, even thought a substantial portion of the gift was effectively refunded to the taxpayer through a charitable state tax credit. In this article, Blackman and Stark explain that the IRS memorandum permits states to adopt charitable tax credits that effectively enable taxpayers to convert state taxes to charitable gifts — a strategy that would be attractive to alternative minimum taxpayers. Those state charitable tax credits (some with extraordinarily high credit percentages) appear to be on the rise, perhaps in part because they effectively enable a transfer of revenue from the federal government to the states. The authors believe the memorandum should be repudiated (as a matter of appropriate federal tax policy), but if it is not, states should consider taking advantage of it. The article discusses how the strategy applies in the case of proposed California legislation that would permit a 60 percent tax credit for contributions to a state fund designed to increase financial support for low- and middle-income students to pursue secondary education.

September 25, 2013 in Scholarship, Tax | Permalink | Comments (0)

The IRS Scandal, Day 139

Tuesday, September 24, 2013

ABA Journal: Legal Services Companies Are Eating Law Firms' Lunch

COverABA Journal:  Who’s Eating Law Firms’ Lunch?, by Rachel Zahorsky (Director of Marketing, Novus Law) & William D. Henderson (Indiana):

2012 revenue for the top 100 U.S. firms totaled more than $70 billion, according to American Lawyer magazine. Since the recession hit the legal profession in 2007, these firms have grown in headcount, often through mergers and the absorption of lawyers from several law firm failures. But on a per-lawyer basis, revenue has been essentially flat.

Novus Law, by contrast, is tripling its revenue year over year. And as Novus and many other legal vendors snatch millions of dollars in work typically done by traditional law firms, the growth of the Am Law 100 could disappear completely.

September 24, 2013 in Legal Education | Permalink | Comments (4)

McCaffery: Behavioral Economics and Tax Law

L&EEdward McCaffery (USC), Behavioral Economics and the Law: Tax, in Oxford Handbook of Behavioral Law & Economics (Doron Teichman & Eyal Zamir, eds.) (2014):

This chapter argues that a behavioral law and economics approach to tax is deeply needed for a wider normative analysis of the impacts of law on social welfare. The absence of traditional markets to serve as arbitrage mechanisms in public finance means that suboptimal tax and fiscal systems can arise and persist for long periods of time. Most of the current scholarly applications of behavioral approaches to tax, however, fail to take into account the institutional settings in which tax laws exist. The common recommendation for tax-favored savings plans to counteract a persistent individual-level myopia that leads to under-savings for many suffers from the possibility of being undercut on account of the ability to borrow tax-free under the current income tax system, combined with...individual-level myopia. Similarly, a recent trend of scholarship that argues for “low salient” taxes to help ameliorate persistent fiscal crises (themselves exacerbated by pervasive behavioral biases playing out in a setting absent effective arbitrage mechanisms) ignores or underplays the real costs of even hidden taxes, both allocatively and distributionally. The chapter concludes that the most critical work for a behavioral law and economics approach to tax lies ahead.

September 24, 2013 in Scholarship, Tax | Permalink | Comments (2)