Paul L. Caron

Thursday, April 30, 2015

Brown Discusses Tax Fairness and the Racial Wealth Gap Today in Washington, D.C.

BannerDorothy Brown (Vice Provost, Emory) speaks on a panel on What's the Code Got to Do with It? Tax Fairness and the Racial Wealth Gap at the Color of Wealth Summit: The United States of Opportunity today at the Congressional Auditorium in the U.S. Capitol Visitor Center in Washington, D.C. (Program):

Out of the world’s top 22 industrialized countries, the United States has the highest level of wealth inequality after accounting for taxes and transfers. Despite redistributive measures such as the Earned Income Tax Credit, the U.S. tax code and other transfers do less to address wealth inequality than has been commonly understood.

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April 30, 2015 in Tax, Tax Conferences | Permalink | Comments (0)

Do Prestigious Law Degrees Really Matter?

Inside Higher Ed, Do Prestigious Law Degrees Really Matter?:

Do prestigious law degrees really matter? Yes, according to a new study from Chris Rider, assistant professor of business strategy at Georgetown University, and Giacomo Negro, associate professor of organization and management at Emory University. The authors studied the career paths of 224 law firm partners after their prominent firm [Brobeck] failed and found that while as a group the partners were likely to accept new positions of lower status elsewhere, their individual success largely depended on where they'd earned their law degrees.

According to the study, published in Organizational Science, law partners who graduated from the most prestigious law schools were least likely to lose professional status as a result of the collapse of their firm -- likely because they were able to draw on a strong professional network and appeal more to clients to find new work. Quality and productivity, at least as measured by the graduates' precollapse compensation, wasn't a factor, the authors say. That's because the graduates of the most prestigious schools were not necessarily the highest paid.

Chris Rider (Georgetown Business School) & Giacomo Negro (Emory Business School), Organizational Failure and Intraprofessional Status Loss:

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April 30, 2015 | Permalink | Comments (0)

Davis: Mapping the Families of the Internal Revenue Code

Tessa R. Davis (South Carolina), Mapping the Families of the Internal Revenue Code, 22 Va. J. Soc. Pol'y & L. 179 (2015):

The Tax Code contains not one, but two conceptions of family. Existing scholarship does not address this puzzle but instead takes one of two views on the family—either the family is a tool for avoiding taxes or it is a source of discrimination. Current scholars, motivated by the discrimination concern, reject the relevance of kinship to tax and argue for an increased focus on the individual. This Article takes a different approach. Utilizing the “status” and “contract” distinctions familiar to family law scholars, it explains the puzzle of the multiple families in the Code, identifying the two families of the Code and their respective functions.

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April 30, 2015 in Scholarship, Tax | Permalink | Comments (0)

George Soros May Face a Monster $6.7 Billion U.S. Tax Bill

Soros 2Bloomberg, George Soros May Face a Monster Tax Bill:

George Soros likes to say the rich should pay more taxes. A substantial part of his wealth, though, comes from delaying them. While building a record as one of the world’s greatest investors, the 84-year-old billionaire used a loophole that allowed him to defer taxes on fees paid by clients and reinvest them in his fund, where they continued to grow tax-free. At the end of 2013, Soros—through Soros Fund Management—had amassed $13.3 billion through the use of deferrals, according to Irish regulatory filings by Soros.

Congress closed the loophole in 2008 and ordered hedge fund managers who used it to pay the accumulated taxes by 2017. A New York-based money manager such as Soros would be subject to a federal rate of 39.6 percent, combined state and city levies totaling 12 percent, and an additional 3.8 percent tax on investment income to pay for Obamacare, according to Andrew Needham, a tax partner at Cravath, Swaine & Moore. Applying those rates to Soros’s deferred income would create a tax bill of $6.7 billion. That calculation is based on publicly available information such as the Irish regulatory filings, which provide only a partial glimpse into Soros’s finances. ....

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April 30, 2015 in Tax | Permalink | Comments (3)

Nussim & Tabbach: Tax-Loss Mechanisms

Jacob Nussim (Bar-Ilan University) & Avraham Tabbach (Tel-Aviv University), Tax-Loss Mechanisms, 81 U. Chi. L. Rev. 1509 (2014):

Business losses are a persistent reality and far from an insignificant economic phenomenon. They are disruptive for businesses and burdensome for tax authorities. This Article builds a theory of tax-loss-mechanism design and discusses its normative implications. Although income-tax laws in the United States and else-where conclusively adopt a loss-offset mechanism, economists often advocate that losses be governed by a tax-refundability regime. Tax scholars, on the other hand, largely ignore the question of the desirable tax-loss mechanism.

This Article constructs and applies an economic framework for analyzing three prominent tax mechanisms for the treatment of losses: offset, refundability, and transferability. The economic theory that we develop yields several new insights and results. We show that all three tax mechanisms diverge primarily by legal design choices rather than by any inherent feature, and therefore, contrary to the common understanding in the literature, any normative choice can be imple-mented through any of the three, setting aside implementation costs. The commonly perceived differences among these tax mechanisms are erroneously grounded in observations of existing tax rules; this has prevented scholars from envisioning a redesign according to policy preferences.

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April 30, 2015 in Scholarship, Tax | Permalink | Comments (0)

Harper: Law School Moral Hazard

Moral HazardSteven J. Harper (Adjunct Professor, Northwestern), Bankruptcy and Bad Behavior — The Real Moral Hazard: Law Schools Exploiting Market Dysfunction, 23 Am. Bankr. Inst. L. Rev. 347 (2015):

The widespread discussion about the market for law graduates ignores an essential fact: it's not a single market at all. Employment opportunities vary dramatically across schools, yet tuition prices fail to reflect those differences. As a consequence, many schools with the worst placement rates burden their students with the highest levels of educational debt. How is that possible?

The answer is market dysfunction. Current federal student loan and bankruptcy policies encourage all law school deans to maximize tuition and fill classrooms, regardless of their students' job prospects upon graduation. This law school moral hazard combines with prelaw students' unrealistic expectations about their legal careers to produce enormous debt for a JD degree that, for many graduates, does not even lead to a JD-required job.

This article proposes a way to identify three distinct law school submarkets [24 National Law Schools, 88 Regional Law Schools, 89 Problematic Law Schools]. Using those submarkets, it offers a plan to create a more functional market that enhances law school accountability, encourages meaningful price differences among schools based on outcomes, and spurs innovation.

Here are the 24 National Law Schools:

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April 30, 2015 in Law School Rankings, Legal Education | Permalink | Comments (6)

ABA Releases Class of 2014 Law Graduate Employment Data

ABA Logo 2Following up on Saturday's post, Class of 2014 Law School Job Placement Rankings:  Press Release, ABA Releases Law Graduate Employment Data for Class of 2014:

Law schools reported a slight rise in the percentage of 2014 graduates obtaining entry-level jobs compared with 2013 and a slight decline in the total number of jobs, according to figures announced today by the American Bar Association's accrediting body. The two numbers are explained, in part, by the decrease in law school graduates from 2013 to 2014.

The ABA Section of Legal Education and Admissions to the Bar released aggregate national data on law graduate employment outcomes for the class of 2014 and posted individual schools' post-graduate employment figures online. An online table also provides select national side-by-side comparisons between the classes of 2014 and 2013.

The nation's 204 ABA-approved law schools reported that roughly 10 months after graduation, 31,160 graduates of the class of 2014, or 71 percent, were employed in long-term, full-time positions where bar passage is required or a J.D. is preferred. The 2014 figures break down as follows:

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April 30, 2015 in Legal Education | Permalink | Comments (3)

Blum: Migrants With Retirement Plans

Florida Tax ReviewCynthia A. Blum (Rutgers-Newark), Migrants with Retirement Plans: The Challenge of Harmonizing Tax Rules, 17 Fla. Tax Rev. 1 (2015):

Many countries seek to encourage retirement savings for their residents by offering tax preferences for privately-operated "qualified retirement plans." These tax preferences generally take the form of delaying taxation of contributions made to the plan and of the earnings thereon until funds are withdrawn by the participant during retirement. In a few cases, countries instead tax contributions immediately but forgo further tax. Because these rules encompass the tax treatment to be accorded throughout an individual’s lifetime, the individual is able to plan for retirement with some assurance of the eventual tax consequences. However, in recent years, it has become increasingly likely that an individual who has accumulated qualified retirement savings in one country will later migrate and retire in another country and, as a result, face unexpected tax consequences.

This Article examines (1) the tax rules commonly applied by the country of emigration in order to maintain its ability to tax a departing participant in a qualified plan, and (2) the tax rules commonly applied by the country of immigration when its new resident has accumulated savings in another country’s qualified plan. The Article then analyzes how the interaction of the two countries’ rules may lead to inappropriate tax consequences and administrative burdens. In addition, it considers the various ways that bilateral treaties and model tax treaties seek to ameliorate these concerns.

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April 30, 2015 in Scholarship, Tax | Permalink | Comments (0)

Fleming, Peroni & Shay: Formulary Apportionment in the U.S.

J. Clifton Fleming (BYU), Robert J. Peroni (Texas) & Stephen E. Shay (Harvard), Formulary Apportionment in the U.S. International Income Tax System: Putting Lipstick on a Pig?, 36 Mich. J. Int'l L. 1 (2015):

Perhaps surprisingly, this Article has shown that the debate over formulary apportionment is little more than an alternative path to the larger debate over worldwide taxation versus territorial taxation. The present U.S. international income tax regime for U.S. MNEs is an implicit, overly-generous, and incoherent quasi-territorial system that relies on residence rules, source rules, and the arm’s-length approach to apportion international business profits between domestic income that is currently taxable by the United States and foreign income that is effectively exempt, or nearly so, from U.S. taxation because of deferral and cross-crediting. This version of territoriality is quite ugly because it is highly complex and it imposes only modest restraints on the ability of U.S. MNEs to shift income out of the U.S. tax base to low-tax foreign countries.

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April 30, 2015 in Scholarship, Tax | Permalink | Comments (0)

The IRS Scandal, Day 721

Wednesday, April 29, 2015

A J.D. Is The Sixth Best Graduate Degree For Jobs In 2015

Payscale LogoFortune, Best and Worst Graduate Degrees for Jobs in 2015:

PayScale crunched the numbers for Fortune and identified the grad degrees that lead to lucrative careers — and those that lead to high stress and low pay.

It’s that time of year when college graduates ponder their future plans, and those heading for more higher learning put down deposits for grad school tuition. In a knowledge economy, the pay gap is the widest it’s been in a generation, between those with more education, versus those with less. Which degrees are the best investment?

To determine the best and worst graduate degrees for jobs, Fortune consulted the careers site, PayScale. The site considered the full-range of graduate degrees, including Ph.D.s, master’s degrees, and law degrees.

The ranking is based upon these factors:

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April 29, 2015 in Law School Rankings, Legal Education | Permalink | Comments (5)

Ajay Mehrotra Named Director of American Bar Foundation

MehrotraAmerican Bar Foundation Names New Director:

The American Bar Foundation has announced that Ajay K. Mehrotra, Associate Dean for Research and Professor of Law at Indiana University’s Maurer School of Law, has been appointed Director of the American Bar Foundation, effective September 1, 2015. He is also appointed a full Research Professor at the ABF and will become a professor of law at Northwestern University School of Law. Mehrotra succeeds Robert L. Nelson, Director and MacCrate Chair in the Legal Profession and Professor of Sociology and Law at Northwestern University, who will return to full-time research and teaching.

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April 29, 2015 in Legal Education, Tax, Tax Prof Moves, Tax Profs | Permalink | Comments (1)

Tax Compliance As A Wicked System

WickedJ. T. Manhire (U.S. Treasury Department), Tax Compliance as a Wicked System:

This paper proposes a new typology and framework for tax compliance systems. Traditionally-competing approaches such as deterrence theory, behaviorist theory, and game theoretic models taken together suggest that tax compliance is perhaps a new type of system — a “wicked system” — that is only partially comprehensible by understanding the traditional theories alone. If correct, previously competing theories become simply different limiting cases of the same underlying “wicked system.” The paper concludes with a discussion of the framework’s limitations and presents initial solutions and challenges for future work.

April 29, 2015 in Scholarship, Tax | Permalink | Comments (0)

Brookings Value-Added College Rankings

BrookingsBrookings Institution, Beyond College Rankings: A Value-Added Approach to Assessing Two- and Four-Year Schools (press release, report, FAQ):

New data and analysis of two - and four - year schools released today by the Brookings Metropolitan Policy Program provides fresh insight into how well colleges prepare students for high-paying careers.

The report is the first to develop measures of “value added” for a broad array of two- and four-year colleges. To do so, it analyzes data on economic outcomes for graduates of these institutions, adjusting them for the characteristics of their students at the time they are admitted, and other factors. The resulting measures capture the contributions that the colleges themselves make to their graduates’ eventual economic success. ... Compared to popular college rankings, the value-added method focuses on how well colleges contribute to student economic success, rather than simply their ability to attract top students.

Brookings ranked over 7,000 colleges.  The six four-year colleges with the biggest gap between  predicted and actual midcareer earnings for graduates are Cal-Tech, Carleton, Colgate, MIT, Rose-Hulman, and Washington & Lee:

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April 29, 2015 in Law School Rankings, Legal Education | Permalink | Comments (0)

Why Don't Law Professors Play Well With Others?

PlayMichael I. Meyerson (Baltimore), Law School Culture and the Lost Art of Collaboration: Why Don't Law Professors Play Well with Others?, 93 Neb. L. Rev. 547 (2015):

I have an Erdős number. Specifically, I have an Erdős number of 5. For the uninitiated, the concept of an “Erdős number” was created by mathematicians to describe how many “degrees of separation” an author of an article is from the great mathematician Paul Erdős. If you coauthored a paper with Erdős, you have an Erdős number of 1. If you coauthor a paper with someone with an Erdős number of 1, you have earned an Erdős number of 2. Coauthoring a paper with someone with an Erdős number of 2 gives you an Erdős number of 3, and so on.

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April 29, 2015 in Legal Education, Scholarship | Permalink | Comments (0)

North Carolina Legislation Would Require All UNC Faculty To Teach Eight Courses Per Year

UNC LogoChronicle of Higher Education, N.C. Legislation Would Set teaching Load at 8 Courses a Year:

A bill introduced in late March in the North Carolina General Assembly has set college faculty members across the state abuzz with a bold suggestion:  Require all professors within the University of North Carolina system to teach at least eight courses each academic year.

Senate Bill 593, titled "Improve Professor Quality/UNC System," would reduce the salary of any professor who fails to hit that annual mark. ..

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April 29, 2015 in Legal Education | Permalink | Comments (20)

Why the NFL Gave Up Its Nonprofit Status: To Escape Scrutiny

NFLVox, Why the NFL Just Gave Up Its Nonprofit Status: To Escape Scrutiny:

For years, the NFL's tax-exempt status has been the subject of scrutiny and ridicule. To many people, the fact that a league headed by a commissioner making $44 million a year was categorized as a nonprofit was absurd.

On Tuesday, Richard Rubin at Bloomberg reports, the NFL has finally decided to shed its tax-exempt status. As a result, it will pay an estimated $10 million or so per year in taxes.

But it's important to put this number in the proper context: the league's teams pull in about $9.5 billion per year, nearly a thousand times as much. And since 2000, US taxpayers have spent an estimated $3.9 billion on stadiums for these teams.

The NFL's decision to give up its tax-exempt status isn't some noble recognition of the tax burden it's unfairly been shirking. It's a calculated move to pay a relatively small fee to avoid scrutiny and preempt possible Congressional action.

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April 29, 2015 in Celebrity Tax Lore, Tax | Permalink | Comments (3)

McGinnis: The New Architecture of Legal Education

John O. McGinnis (Northwestern), The New Architecture of Legal Education:

One can think of higher education as providing three distinct services: transferring information and skills, signaling the quality of students to employers, providing professional networking opportunities for students.

Nothing better represents the decline of the first function than the plight of the university library. Historically, universities have flourished in part because of exclusive access to information, not just in the books they owned but also in the professors they employed. But their monopoly is fast eroding with the rise of the internet. Every year I have been at Northwestern, I have noticed fewer people in the library on my trip there. I now rarely cross its threshold myself: almost everything I need is available with a few keyboard strokes or mouse clicks. And, with its strict norms of silence and fragmented space, the library is not well-suited to networking. ...

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April 29, 2015 in Legal Education | Permalink | Comments (2)

The IRS Scandal, Day 720

IRS Logo 2Press Release, Statement By Senator John McCain on False Reports on IRS Targeting:

A recent press release by Judicial Watch sparked a series of online reports falsely claiming that my office was somehow involved in the IRS’s targeting of conservative groups – reports that are demonstrably untrue and totally contradicted by my all of my actions over the past several years on this issue.

“These reports ignore the fact that I released a 37-page dissenting report last September refuting the Democrats’ Majority Permanent Subcommittee on Investigations (PSI) report claiming the IRS showed no bias against conservative groups. Media coverage at the time noted that I was in total disagreement with Senate Democrats on the issue of whether the IRS targeted conservative groups. ...

Like so many Americans, I was shocked and appalled by revelations that the IRS inappropriately singled out conservative groups for scrutiny, and that our tax system was used to target political opponents. “As Ranking Member of the Senate’s Permanent Subcommittee on Investigations, I devoted significant time and resources to help get to the bottom of this disturbing abuse of power by the IRS. Any article suggesting otherwise is simply wrong, and ignores the facts of my actions over the last several years.

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April 29, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Tuesday, April 28, 2015

Tom Brennan Leaves Northwestern For Harvard

BrennanThomas Brennan (Northwestern) has accepted a tenured lateral offer from Harvard, effective July 2015:

Also trained as a mathematician, Brennan focuses his research on the use of finance and economics to analyze and inform tax policy, as well as the use of empirical methods to investigate the effects of tax laws and the strategic behavior of taxpayers. In addition, he analyzes how finance and economics can inform other areas of the law, with a recent focus on regulations designed to limit risk, and he applies mathematical methods to gain insight into the theory of finance.

“Tom is a triple-threat: his detailed knowledge of contemporary finance and tax, his talent for integrating doctrinal and empirical studies, and his teaching each reveal meticulous and rigorous work and imagination,” said Martha Minow, dean of Harvard Law School. “His rigorous, empirical study of a wide range of subjects – from tax law to judicial decisions – yields important analyses of policy effectiveness and powerful lessons for law students, practitioners, policymakers, and scholars. Plus his generosity and kindness pervade his teaching and his collegiality. We are thrilled to welcome this wonderful alum to our faculty.”

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April 28, 2015 in Legal Education, Tax, Tax Prof Moves | Permalink | Comments (0)

Schizer Presents Energy Tax Expenditures Today at NYU

Schizer (2016)David M. Schizer (Columbia) presents Energy Tax Expenditures: Worthy Goals, Competing Priorities, and Flawed Institutional Design at NYU today as part of its Tax Policy Colloquium Series hosted by Daniel Shaviro and Alan Viard:

Part I outlines the environmental, national security, and economic goals of energy tax expenditures.  Part II discusses how empirical uncertainty and heterogeneity complicate efforts to pursue these objectives.  Part III considers challenges that arise because of conflicts in our goals.  Part IV canvasses the political economy advantages of subsidies over Pigouvian taxes, and offers suggestions about how to make Pigouvian taxes more politically palatable.  Part V surveys five institutional design challenges that arise under currently law – most of which are more acute with subsidies than with Pigouvian taxes – and offers suggestions about how to mitigate them.  Part VI is the conclusion.

April 28, 2015 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Symposium: The 100th Anniversary of the Income Tax

NYLSSymposium, The 100th Anniversary of the Revenue Act of 1913: Marking a Century of Income Tax Law in the United States, 59 N.Y.L. Sch. L. Rev. 261-420 (2014):

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April 28, 2015 in Scholarship, Tax, Tax Conferences | Permalink | Comments (0)

Are PILOTs Property Taxes for Nonprofits?

Fan Fei (Michigan), James R. Hines Jr. (Michigan) & Jill R. Horwitz (UCLA), Are PILOTs Property Taxes for Nonprofits?:

Nonprofit charitable organizations are exempt from most taxes, including local property taxes, but U.S. cities and towns increasingly request that nonprofits make payments in lieu of taxes (known as PILOTs). Strictly speaking, PILOTs are voluntary, though nonprofits may feel pressure to make them, particularly in high-tax communities. Evidence from Massachusetts indicates that PILOT rates, measured as ratios of PILOTs to the value of local tax-exempt property, are higher in towns with higher property tax rates: a one percent higher property tax rate is associated with a 0.2 percent higher PILOT rate. PILOTs appear to discourage nonprofit activity: a one percent higher PILOT rate is associated with 0.8 percent reduced real property ownership by local nonprofits, 0.2 percent reduced total assets, and 0.2 percent lower revenues of local nonprofits. These patterns are consistent with voluntary PILOTs acting in a manner similar to low-rate, compulsory real estate taxes.

April 28, 2015 in Scholarship, Tax | Permalink | Comments (2)

ATL's 2015 Law Revue Video Contest

Above the Law has announced the six finalists in its 2015 Law Revue Video Contest. My two favorites are (click on Vimeo/YouTube button on bottom right to view video directly on Vimeo/YouTube to avoid interruption caused by blog's refresh rate):

Harvard Law School — Rather Read:

Columbia Law School — Fed Soc:

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April 28, 2015 in Legal Education | Permalink | Comments (0)

State Law School Job Placement Rankings: CA, NY, And DC/MD/VA

Job Placement RankingsDerek Muller (Pepperdine) has created state-by-state law school placement rankings by full-time, long-term, bar passage-required and J.D.-advantage positions (with and without school-funded jobs):

For a national ranking of every law school by full-time, long-term, bar passage-required jobs, see here.

April 28, 2015 in Law School Rankings, Legal Education | Permalink | Comments (0)

IRS Seeks To Tax $50k Raised From GoFundMe For Cancer Treatment For Car Crash Victim

Go Fund MeKETV, IRS: Cancer Survivor Owes $19,000 in Taxes From Donations:

Two years after surviving a terrible car crash and battling cancer, Casey Charf never imagined she’d be fighting a new battle with the IRS.

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April 28, 2015 in IRS News, Tax | Permalink | Comments (2)

Johnston: What Would Jesus Do About Tax Policy?

CaptureAl Jazeera:  What Would Jesus Do About Tax Policy?, by David Cay Johnston (Syracuse):

After years of study and debate, the ninth-largest Protestant denomination, the Presbyterian Church USA, has come out with a detailed report that ties the religious duty of believers and government tax policy [Tax Justice: A Christian Response to a Second Gilded Age].

[W]ho can organize people to push for changes in government policy that will reduce poverty and extreme inequality?

The University of Chicago Divinity School’s Myriam Renaud provided an answer recently:

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April 28, 2015 in Tax | Permalink | Comments (1)

Ohio State Law Grad Has $328,000 Of Student Loan Debt

Ohio State LogoABA Journal, Law Grad From Ill-fated Class of 2010 Had $328K in Student Debt and Worked Three Jobs:

The numbers were bad for law grad Hyatt Shirkey.

He graduated from Ohio State’s law school in 2010—a particularly tough year for Ohio law grads, according to a study by a law professor at the school, Deborah Jones Merritt. And he had $328,000 in student debt, according to the New York Times. TaxProf Blog noted the story.

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April 28, 2015 in Legal Education | Permalink | Comments (4)

The IRS Scandal, Day 719

IRS Logo 2Examiner, IRS Attacks Conservative Groups But Silent on Clinton Foundation:

In the midst of the news media coverage of the Hillary Clinton emails, her private Internet server, her thumbing her nose at government regulations and allegations that her and her husband's "charity" was involved in shady deals, no one except for public-interest groups is asking about an IRS investigation. There are several allegations that the Clinton Foundation is nothing more than a sophisticated and elaborate political slush fund, according to news stories on Monday.

More than one group that was targeted by the IRS for daring to be conservative believes that if there ever was an organization that should be investigated and audited by the IRS it's the Clinton Foundation. The Clintons possess a talent for making incriminating documents disappear and Americans are warned to not hold their breath waiting for the IRS or the Justice Department investigate the Clintons and their arguably corrupt foundation.

However, the Clintons' home state of Arkansas has a young attorney general who does possesses the authority to launch a criminal investigation because the foundation claims the state of Arkansas as its headquarters. Attorney General Leslie Rutledge will likely be trashed by the Clinton machine

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April 28, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

Monday, April 27, 2015

InfiLaw Op-Ed On Charleston Law School's Deteriorating Financial Position

Infilaw CharlestonCharleston Post and Courier op-ed:  CSOL on Shaky Ground, by C. Peter Goplerud (President, InfiLaw Management Solutions):

I know that there are rumors and frustrations concerning the future of the Charleston School of Law. I, too, am very concerned and believe that it is in the best interests of the community and South Carolina Bar that, with or without InfiLaw, the school continues to survive. The CSOL was already in a fragile position when we signed the agreement almost two years ago to acquire it. Like most law schools, it was facing the challenging prospects of falling enrollment as legal employment and, as a result, law school applications were declining rapidly, just as they were throughout the nation.

Moreover, since 2010, the owners have taken $25 million in distributions, depriving the school of capital to withstand a downturn in the economy. Unlike schools affiliated with a university system, the Law School has no source of financial support other than tuition....

Unfortunately, our efforts to acquire the Law School ran into opposition based on arguments that we believed were either without basis in fact or clouded by bias against a business model that ironically is the same as that of the CSOL. ... [N]o serious or credible offer to acquire the Law School ever materialized, even though we allowed the school to consider such an offer by waiving our binding purchase agreement. And all the while, the situation at the CSOL has continued to deteriorate:

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April 27, 2015 in Legal Education | Permalink | Comments (0)

NY Times: Inversion Schadenfreude -- By Moving Overseas To Save Taxes, Mylan And Perrigo Lost Protections They Could Deploy To Fend Off Teva's Hostile Takeover

NY Times Dealbook (2013)New York Times Deal Book:  The Unintended Twist of Tax Inversions, by Steven Davidoff Solomon (UC-Berkeley):

Teva’s unsolicited $40 billion bid for the drug maker Mylan and Mylan’s own unsolicited offer for the rival Perrigo are sweet revenge for the United States taxpayer.

The reason is their flight from the United States in tax inversions has made both more exposed to hostile takeovers. Their executives may now rue the day they left the United States simply to save a few dollars in taxes.

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April 27, 2015 in Tax | Permalink | Comments (3)

Ryan Receives St. Louis Faculty Scholarship Award

RyanCongratulations to Kerry Ryan (St. Louis), who received the St. Louis Law School Faculty Award For Exceptional Legal Scholarship today for her article, EITC as Income (In)Stability?, 14 Fla Tax Rev. 583 (2014):

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April 27, 2015 in Legal Education, Scholarship, Tax | Permalink | Comments (0)

Love and Merit

New York Times op-ed:  Love and Merit, by David Brooks:

There are two great defining features of child-rearing today. First, children are now praised to an unprecedented degree. As Dorothy Parker once joked, American children aren’t raised; they are incited. They are given food, shelter and applause. That’s a thousand times more true today. Children are incessantly told how special they are.

The second defining feature is that children are honed to an unprecedented degree. The meritocracy is more competitive than ever before. Parents are more anxious about their kids getting into good colleges and onto good career paths. Parents spend much more time than in past generations investing in their children’s skills and résumés and driving them to practices and rehearsals.

These two great trends — greater praise and greater honing — combine in intense ways. Children are bathed in love, but it is often directional love. Parents shower their kids with affection, but it is meritocratic affection. It is intermingled with the desire to help their children achieve worldly success.

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April 27, 2015 in Legal Education | Permalink | Comments (3)

NY Times: Investors Race To Do Like-Kind Exchanges Of Art As Obama Proposes Closing Section 1031 Loophole

SunNew York Times, Tax Break Used by Investors in Flipping Art Faces Scrutiny:

Introduced in the 1920s to ease the tax burden of farmers who wanted to swap property, it soon became a tool for real estate investors flipping, say, office buildings for shopping malls.

Now, this little-known provision in the tax code, known as a like-kind exchange, has become a popular tactic for a new niche of investors: buyers of high-end art who want to put off — and sometimes completely avoid — federal taxes when upgrading their Diebenkorns for Rothkos. ..

The exchanges have become prevalent enough, and the cost to the government significant enough, that the Obama administration is seeking to eliminate them, a prospect causing no shortage of alarm in sectors of the art world. ...

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April 27, 2015 in Tax | Permalink | Comments (3)

NY Times: Finland Imposes Progressive Fines Based On Income; Millionaire Receives $58,000 Speeding Ticket

FinlandNew York Times, Speeding in Finland Can Cost a Fortune, If You Already Have One:

Reima Kuisla, a Finnish businessman, ... was recently fined 54,024 euros (about $58,000) for traveling a modest, if illegal, 64 miles per hour in a 50 m.p.h. zone. And no, the 54,024 euros did not turn out to be a typo, or a mistake of any kind. Mr. Kuisla is a millionaire, and in Finland the fines for more serious speeding infractions are calculated according to income. The thinking here is that if it stings for the little guy, it should sting for the big guy, too. ...

[T]he Finnish “day fine” system, also in use in some other Scandinavian countries, dates to the 1920s, when fines based on income were instituted for all manner of lesser crimes, such as petty theft and assault, and helped greatly reduce the prison population.

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April 27, 2015 in Tax | Permalink | Comments (1)

NY Times: Burdened With Debt, Law Grads Struggle in Job Market

NY Times Dealbook (2013)New York Times Deal Book:  Burdened With Debt, Law School Graduates Struggle in Job Market, by Elizabeth Olson:

About 20 percent of law graduates from 2010 are working at jobs that do not require a law license, according to a new study, and only 40 percent are working in law firms, compared with 60 percent from the class a decade earlier. To pay the bills, the 2010 graduates have taken on a variety of jobs, some that do not require admission to the bar; others have struck out on their own with solo practices. Most of the graduates have substantial student debt.

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April 27, 2015 in Legal Education | Permalink | Comments (7)

Carter: A Critique of Charitable Bequests

Elizabeth R. Carter (LSU), Tipping the Scales in Favor of Charitable Bequests: A Critique, 34 Pace L. Rev. 983 (2014):

This paper considers the public policy favoring testamentary bequests to charity and offers a critique of that policy.

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April 27, 2015 in Scholarship, Tax | Permalink | Comments (0)

After Public Shaming, Law Prof Tries To Reclaim Her Dignity

McElroyWashington Post op-ed:  After a Public Shaming, Reclaiming My Dignity, by Lisa T. McElroy (Drexel):

When a Web site broke the news on April 3 that, instead of posting an Internet link to an article about writing legal briefs, I had inadvertently sent my law school students a link to a porn site, I thought I could never recover. ...

Even before the story hit the Web, I was in terrible shape; when I learned a few days earlier what I had done, I was mortified.

As a law professor, I care deeply about students and their educational experience. As an employee, I care about my institution of learning. As a mother, I care about being a role model for my adolescent daughters.

Selfishly, I care about my dignity. ...

At first, when I learned what had happened, I was sure I had lost my dignity forever. Unsurprisingly, some students spread word of the incident through social media and anonymous e-mails to the media. Everyone was talking about me. Everyone was speculating about whether I watched porn, or used sex toys, or liked kinky sex. Some people were calling for my job and law license.

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April 27, 2015 in Legal Education | Permalink | Comments (9)

Findley: Why Doesn't Skills Training Improve Law Student Employment Outcomes?

Keith A. Findley (Wisconsin), Assessing Experiential Legal Education: A Response to Professor Yackee:

In his recent article [Does Experiential Learning Improve JD Employment Outcomes?], my colleague Jason Yackee offers some interesting data on comparative rates of law-related job placement for graduates of the top 100 U.S. law schools. In the end, his analysis in part reaches the entirely unsurprising conclusion that higher-ranked law schools are more successful at placing their graduates in full-time law-related jobs than are lower-ranked schools. More interestingly, and less obviously, his data also suggest that schools that offer more experiential learning opportunities do not have any greater success in placing their students in full-time law-related jobs than do schools with fewer clinical offerings. From this, he queries whether clinical legal education is worth the expense and opportunity costs that it represents to law schools.

In this response I focus on two important but largely overlooked questions that Yackee's data analysis (if correct) raises.

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April 27, 2015 in Legal Education | Permalink | Comments (7)

The IRS Scandal, Day 718

IRS Logo 2Breitbart, GOP Sen. Presses Obama Administration On Criminal Probe Of IRS Targeting of Conservatives:

On Tax Day, Senate Judiciary Committee Chairman Chuck Grassley (R-IA) pressed the Obama administration for an update on the criminal investigation into the alleged misconduct of IRS personnel in the handling of conservative organizations’ tax exempt status.

“It’s unclear whether all of these cases are open or closed,” Grassley said Wednesday. “The investigative agencies should account for their work. The scandal damaged the public trust in the IRS. Building back any of that trust requires investigation and accountability for any misconduct.”

In a letter to the Acting Deputy Attorney General Sally Quillian Yates and the Treasury Inspector General for Tax Administration J. Russell George, the Iowa lawmaker requested more information about the investigation — or lack thereof.

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April 27, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (5)

TaxProf Blog Weekend Roundup

Sunday, April 26, 2015

What LSU Portends for the Future of Legal Education

LSU Logo (2016)Boston Globe, LSU to Draft Insolvency Plan as Jindal Cuts Loom:

Louisiana State University will draw up a financial exigency plan, equivalent to college bankruptcy, as $608 million in budget cuts proposed by Governor Bobby Jindal threaten to cripple the state’s higher-education system.

Exigency, declared when schools face insolvency, would allow the state’s flagship institution to restructure and fire tenured faculty.

TaxProf Blog op-ed:   What LSU Portends for the Future of Legal Education, by David Barnhizer (Cleveland State):

When we are trying to figure out what is going to happen with law schools we need to think through what is going to happen with universities. Regardless of what law schools do, if they become financial burdens on their host universities it can be expected that the universities will initiate actions. One is the bankruptcy variation such as reported in relation to LSU in the Boston Globe and the other is the closing of the law school in its entirety and termination of its faculty en masse. The latter approach may be as strategically cynical as closing a school for 3-5 years and then reopening as a new school after ridding the university of faculty during a period in which the demand for new law graduates may increase again.

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April 26, 2015 in Legal Education | Permalink | Comments (8)

The Top 5 Tax Paper Downloads

SSRN LogoThere is quite a bit of movement in this week's list of the Top 5 Recent Tax Paper Downloads, with a new #1 paper and new papers debuting on the list at #4 and #5:

  1. [271 Downloads]  The U.S. Foreign Account Tax Compliance Act: American Legal Imperialism?, by Bruce W. Bean (Michigan State) & Abbey Wright Farnsworth
  2. [252 Downloads]  Recent Developments in Federal Income Taxation: The Year 2014, by Martin J. McMahon Jr. (Florida), Bruce A. McGovern (South Texas) & Ira B. Shepard (Houston)
  3. [217 Downloads]  Can Sharing Be Taxed?, by Shu-Yi Oei (Tulane) & Diane M. Ring (Boston College)
  4. [176 Downloads]  Using the 'Smart Return' to Reduce Tax Evasion, by Joseph Bankman (Stanford), Clifford Nass (Stanford) & Joel Slemrod (Michigan)
  5. [169 Downloads]  The Historical Origins of the Debt-Equity Distinction, by Camden Hutchison (Wisconsin)

April 26, 2015 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

The Plight Of A Christian Professor At An Elite Law School

CLS 2Rod Dreher, The Post-Indiana Future for Christians:

I spent a long time on the phone last night with a law professor at one of the country’s elite law schools. This professor is a practicing Christian, deeply closeted in the workplace; he is convinced that if his colleagues in academia knew of his faith, they would make it very hard for him. ... I will call him Prof. Kingsfield, after the law professor in The Paper Chase. 

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April 26, 2015 in Legal Education | Permalink | Comments (29)

The IRS Scandal, Day 717

IRS Logo 2Pittsburgh Tribune-Review, The Gathering Storm: An IRS Defeat:

Attempting to obscure the extent of its alleged targeting of conservative groups, the Internal Revenue Service has been smacked with a serious setback in its court fight in Ohio.

A federal judge granted a motion compelling the IRS to list the 298 targeted organizations, which the IRS had identified for the Treasury Department inspector general. In a lawsuit filed in 2013, 10 conservative groups, through discovery, have been trying to pry free the list of all groups targeted by the IRS. This, in order to seek class certification and expand the lawsuit to "all the organizations on (ex-IRS official) Lois Lerner's hit list," writes Hans von Spakovsky of The Heritage Foundation. ...

The discernible rumbling of distant thunder portends the gathering storm that is going to rain down on the IRS.

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April 26, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Saturday, April 25, 2015

Class of 2014 Law School Job Placement Rankings

RankingsMatt Leichter, Class of 2014 Employment Report (Leaked Edition):

I’ve been peeking daily at the ABA’s employment summary Web page.  On Friday morning, the class of 2014 data appeared ...  Yet when I returned Friday afternoon, I found it was gone … But not before I downloaded the spreadsheet. ...  I’ve run the numbers, so I just have to leak the results.

58.7 percent of graduates held full-time jobs requiring bar passage, up from 55.9 percent for the class of 2013. However—and this is very important—the actual number of graduates in such jobs fell to 25,292 from 25,762 last year, about a 1.8 percent decline. [43,115 graduated from an ABA-accredited law school outside of Puerto Rico in 2014, compared to 45,824 in 2013, a 4.8% decline.]

Leichter 2

[Here is] the comparison table for each law school, sorted by their 2014 percentage of graduates in full-time bar-passage required jobs less school-funded positions:

Full-Time/Long-Term in Bar-Passage-Required Jobs
(Excluding Law-School-Funded Jobs)

RankLaw School’13’14Change
1. Pennsylvania 85.7% 91.4% +5.7%
2. Cornell 81.3% 90.1% +8.8%
3. Duke 85.1% 87.9% +2.8%
4. Columbia 88.3% 87.2% -1.1%
5. Chicago 86.5% 87.1% +0.6%
6. NYU 86.2% 86.0% -0.2%
7. Harvard 84.9% 85.5% +0.6%
8. UC-Berkeley 78.4% 85.4% +7.0%
9. Stanford 85.1% 85.0% -0.1%
10. Virginia 79.7% 84.8% +5.1%
11. Michigan 81.2% 81.8% +0.6%
12. New Mexico 73.7% 80.2% +6.5%
13. Kentucky 74.4% 80.2% +5.8%
14. Northwestern 77.5% 78.4% +0.9%
15. Iowa 76.3% 77.8% +1.5%
16. Boston College 64.0% 74.4% +10.4%
17. Minnesota 68.2% 73.7% +5.5%
18. Nebraska 66.1% 73.5% +7.4%
19. Vanderbilt 78.2% 73.2% -5.0%
20. Washington University 66.0% 72.9% +6.9%
21. Alabama 71.7% 72.5% +0.8%
22. Ohio State 60.4% 72.4% +12.0%
23. LSU 67.4% 72.4% +5.0%
24. Washburn 62.9% 72.3% +9.4%
25. Seton Hall 68.9% 72.3% +3.4%
26. UCLA 66.6% 71.7% +5.1%
27. Texas 75.1% 71.5% -3.6%
28. Georgia State 62.6% 71.2% +8.6%
29. Georgia 68.4% 70.6% +2.2%
30. Arizona State 61.8% 70.2% +8.4%
31. SMU 70.9% 69.7% -1.2%
32. Georgetown 72.4% 69.6% -2.8%
33. Yale 74.4% 69.6% -4.8%
34. Wake Forest 58.5% 69.5% +11.0%
35. Florida 66.4% 69.3% +2.9%
36. Mercer 65.6% 69.2% +3.6%
37. North Carolina 68.1% 68.7% +0.6%
38. Oklahoma 66.3% 68.5% +2.2%
39. Tulsa 58.0% 68.4% +10.4%
40. Idaho 62.4% 68.3% +5.9%
41. Miami 60.7% 68.2% +7.5%
42. BYU 64.6% 68.1% +3.5%
43. Kansas 64.2% 68.1% +3.9%
44. South Dakota 62.0% 67.9% +5.9%
45. Boston University 61.2% 67.9% +6.7%
46. Fordham 63.4% 67.8% +4.4%
47. Baylor 70.5% 67.6% -2.9%
48. Montana 69.1% 67.5% -1.6%
49. Florida State 69.6% 67.2% -2.4%
50. Colorado 67.0% 66.7% -0.3%

The bottom 10 law schools are:

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April 25, 2015 in Law School Rankings, Legal Education | Permalink | Comments (16)

Ring Presents Can Sharing Be Taxed? Today at Fordham

FordhamDiane M. Ring (Boston College) presents Can Sharing Be Taxed?, 93 Wash. U. L. Rev. ___ (2016) (with Shu-Yi Oei (Tulane)), at Fordham today as part of its conference on Sharing Economy, Sharing City: Urban Law and the New Economy:

The past few years have seen the rise of a new model of production and consumption of goods and services, often referred to as the “sharing economy.” Fueled by startups such as Uber and Airbnb, sharing enables individuals to obtain rides, accommodations, and other goods and services from peers via the Internet or mobile application in exchange for payment. The rise of sharing has raised questions about how it should be regulated, including whether existing laws and regulations can and should be enforced in this new sector or whether new ones are needed.

In this Article, we explore those questions in the context of taxation. We argue that, contrary to the claims of some commentators, the application of substantive tax law to sharing is mostly (though not completely) clear, because current law generally contains the concepts and categories necessary to tax sharing. However, tax enforcement and compliance may present challenges, as a result of two distinctive features of sharing. First, some sharing businesses tend to opportunistically pick the more favorable regulatory interpretation if there is ambiguity regarding which rule applies or whether a rule applies. This leads to compliance and enforcement gaps. Second, the “microbusiness” nature of sharing raises unique compliance and enforcement concerns. We suggest strategies for addressing these dual challenges, including lower information reporting thresholds, safe harbors and advance rulings to simplify tax reporting, and targeted enforcement efforts.

April 25, 2015 in Scholarship, Tax, Tax Conferences | Permalink | Comments (0)

Law School Dean’s Art Teaches Life Lessons For His Students

The Star, Law School Dean’s Art Pieces Translate Into Advice for the Audience:


A drove of horses, koi swimming in a pond, a ship basking in a warm orange glow — these are some of the works on display at Harmahinder Singh’s first solo art exhibition titled UNwritten Law Bespoke Art at the CODA Gallery in Taylor’s University.

At first impression, the piece with the horses can be interpreted as strength in teamwork but the explanation beside it describes something different.

The five internal forces of mankind — lust, anger, greed, worldly attachment and pride — must be held in check. Lose your head and chaos will follow. Either way, it represents positivity and thus, serves as a meaningful conversation piece.

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April 25, 2015 in Legal Education | Permalink | Comments (1)

The IRS Scandal, Day 716

IRS Logo 2Forbes, IRS Forced To Release Names Of Targeted Groups, by Peter J. Reilly:

So we had another Tea Party decision on April 1 of all days. NorCal Tea Party Patriots is one of the ten organizations in a lawsuit against the IRS because of delays and intrusive scrutiny while they were applying for exempt status.  They want it to be a class action suit, but they need information from the IRS to determine what organizations should be in the class. ...

The IRS argued that it could not make those disclosures, because they would be in violation of Code Section 6103 which protects the confidentiality of returns and return information.  The judge went with NorCal on this one.

The Court concludes that the return information sought is directly related to the issue of class certification in this federal court proceeding. The names of the putative class member organizations and their control dates—the date which the putative class member organizations submitted their applications for tax exempt status to the IRS—are directly related to the issue of class certification. Plaintiffs seek the return information of the putative class members to prove to the Court that the Federal Rule of Civil Procedure 23(a) and 23(b) requirements such as typicality, commonality, and whether the IRS acted on a grounds that applied generally to the putative class are satisfied. ...

I’m beginning to despair of their ever being an end to the IRS Scandal on Day 714 by the TaxProf count, as I write this. I thought this latest decision might be a good opportunity to reach out to someone who might have a different view on the whole matter.

Frank Wolpe, Professor Emeritus at Bentley University has written a white paper about rebuilding the IRS. (download)

The paper identifies the ill-conceived massive 1998 structural reorganization and division (like salami-slicing) of field operations as a major cause of the IRS’s current legal battles and “downward slide.” In its 1998 aftermath, we were all left with an overly centralized Washington IRS National Office and an undermanaged array of field operations. That’s where the Tea Party scandal started; and, even more importantly, it need never be repeated. Indeed, such events must stop!

“With that recognition, change-makers can travel a 2015 bipartisan pathway to addressing a wrong-headed 1998 “solution” to a 1998 non-existent structural problem by introducing a 2015 proposal for a National Office consolidation (slimming down) coupled with a field operations decentralization (closer to customers and ending the practice of absentee senior management without local accountability).

Of course the notion that the scandal must have actually started in the Oval Office still has an irresistible grip in some circles, so a boring reorganization just won’t be satisfying.  So maybe it never will end.

Hans von Spakovsky of wrote:

The arguments in this case by the Justice Department are another example of how the IRS has been hiding behind Section 6103. That law was intended to prevent the IRS from publicly disclosing private tax information—such as its illegal disclosure of the tax returns of the National Organization for Marriage (the IRS agreed to pay National Organization for Marriage $50,000 to settle that case in June of 2014). But the IRS has been trying to use this law to prevent having to disclose its abusive treatment of taxpayers.

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April 25, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (5)

Friday, April 24, 2015

Today Is Tax Freedom Day — Earlier In LA, MS & SD, Later In CT, NJ & NY

Tax Foundation logoToday is Tax Freedom Day, the day on which Americans will have earned enough money to pay all federal, state, and local taxes for the year:

Tax Freedom Day is the day when the nation as a whole has earned enough money to pay its total tax bill for the year. Tax Freedom Day takes all federal, state, and local taxes and divides them by the nation’s income. In 2015, Americans will pay $3.28 trillion in federal taxes and $1.57 trillion in state and local taxes, for a total tax bill of $4.85 trillion, or 31 percent of national income. This year, Tax Freedom Day falls on April 24, or 114 days into the year.

This year, Americans will work the longest to pay federal, state, and local individual income taxes (43 days). Payroll taxes will take 26 days to pay, followed by sales and excise taxes (15 days), corporate income taxes (12 days), and property taxes (11 days). The remaining 7 days are spent paying estate and inheritance taxes, customs duties, and other taxes.

Tax Freedom

Center on Budget and Policy Priorities, Tax Foundation Figures Do Not Represent Typical Households’ Tax Burdens:

The Tax Foundation released its annual "Tax Freedom Day" report today that, once again, can leave a strikingly misleading impression of tax burdens -- showing an average federal tax rate across the United States that's likely higher than the tax rate that 80 percent of U.S. households actually pay.

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April 24, 2015 in Tax, Think Tank Reports | Permalink | Comments (1)