Paul L. Caron

Tuesday, February 28, 2017

Osofsky Presents Regulating By Example Today At Georgetown

Osofsky (2016)Leigh Osofsky (Miami) presents Regulating by Example, 35 Yale J. on Reg. ___ (2017) (with Susan C. Morse (Texas)), at Georgetown today as part of its Tax Law and Public Finance Workshop Series hosted by John Brooks and Itai Grinberg:

Agency regulations are full of examples. Regulated parties and their advisors parse the examples to develop an understanding of the applicable law and to determine how to conduct their affairs. However, neither the legal nor theoretical literature contains any study of regulatory examples or explains how they might be interpreted. This Article fills this gap.

In this Article, we explore regulatory examples and set forth a theory for how to interpret them. We examine how regulatory examples, like common law cases, serve as data points that help communicate legal content. We argue that regulatory examples are best understood through analogical, or common law, reasoning, and illustrate this through a variety of examples.

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February 28, 2017 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Columbia Hosts Program Tonight On Tax Reform Under The Trump Administration

Columbia LogoColumbia's Richman Center for Business, Law, and Public Policy hosts a program tonight on Tax Reform Under The Trump Administration:

U.S tax reform for corporations and individuals has been discussed for years. Now we have a unified political environment in both the Executive and Legislative branches of government. What are the proposals we can expect from them? What will be the impact? Comments have already been made about a border adjustable tax on imports. How will that work? What will be the likely impact on trade? What changes will impact individuals? Will taxes really be cut for the middle class? Will income inequality get better or worse because of this?

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February 28, 2017 in Tax, Tax Conferences | Permalink | Comments (0)

Why Swedes Overpay Their Taxes

Economist Logo (2015)The Economist, Why Swedes Overpay Their Taxes:

How abnormal are Swedes, and other people in the Nordic region, in paying tax? A general stereotype for Europe holds some truth: unlike tax-shy southern Europeans, those in the far north pay up readily to get comprehensive, efficient government services—plus societies with unusually equitable income distribution. In Sweden, even after years of slashing high taxes (an inheritance tax went in 2005, another for wealth disappeared in 2007, some taxes on residential property went the next year, corporate tax is low at 22%), the share of GDP claimed by the state remains high. The OECD reckons its government spent over 51% of GDP in 2014. Income tax rates, at least for the well-off, can be as high as 57%. And the Swedes comply. Sociologists, economists and others have long debated this readiness to cough up for the common good. Lutheran beliefs about the importance of supporting the whole community might be a factor. A strong sense of cultural homogeneity for the “folk” matters (now some worry this will be undermined by too much immigration). Maybe the generations spent huddling together to survive long, dark winters has played a role.

This week brought a new puzzle, however, with evidence that some Swedes are deliberately overpaying their taxes.

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February 28, 2017 in Tax | Permalink | Comments (1)

More Law Prof Debate On Ideological Discrimination In Faculty Hiring At Chicago-Kent, Other Law Schools

Chicago-KentFollowing up on yesterday's post, Law Profs Debate Prevalence Of Ideological Discrimination In Faculty Hiring At Chicago-Kent, Other Law Schools:

Ralph Brill (Chicago-Kent), One Current and One Former Chicago-Kent Law Professor Debate the Prevalence of Discrimination Against Conservative/Libertarian Candidates in Law Faculty Hiring:

Jim Lindgren asks: “Since I was hired at Chicago-Kent in 1990, Ralph, how many conservatives, libertarians—or even moderate Republicans—has Chicago-Kent hired?” 

Ralph Brill:  Frankly, I don’t know, because, during that period, to my knowledge, no one other than you or Randy Barnett ever asked faculty candidates to what political group they belonged?   I know I never did.  I have asked others who were there at the time and they all swear they did not. 

Of course, once people joined the faculty, I probably knew from lunch time conversation in the faculty lounge that perhaps five or six voted Republican in recent elections — After Randy Barnett and yourself, there were Dale, Fred, Fred, Phil, Gerry, and, perhaps on some issues, Jeff.  But individual’s political leanings were never discussed by the full faculty or dean when we were voting on whether to extend offers or not to candidates.  (Apparently, according to you, they were discussed behind closed doors by some members of the recruitment committee, but never by the rest of us.)

If anything, the possible questioning of a candidate on politics did occur well before Jim Lindgren joined the faculty.  Thus, when I joined the faculty in 1961, the majority of the full time faculty was openly Republican. The dean was so ardently so that he even refused to lower the school’s flag or call off classes when a president he despised, John F. Kennedy, was assassinated. We had several faculty members in the 1980’s who ran for judgeships as Republicans or not on the Democratic ticket.  The vast majority of the Board of Trustees before our merger with IIT were Republicans.  The major officers at IIT after the merger also were Republicans.

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February 28, 2017 | Permalink | Comments (2)

SSRN Tax Professor Rankings

SSRN LogoSSRN has updated its monthly rankings of 750 American and international law school faculties and 3,000 law professors by (among other things) the number of paper downloads from the SSRN database.  Here is the new list (through February 1, 2017) of the Top 25 U.S. Tax Professors in two of the SSRN categories: all-time downloads and recent downloads (within the past 12 months):







Reuven Avi-Yonah (Mich.)


Reuven Avi-Yonah (Mich.)



Michael Simkovic (S. Hall)


Lily Batchelder (NYU)



Paul Caron (Pepperdine)


Michael Simkovic (S. Hall)



D. Dharmapala (Chicago)


D. Dharmapala (Chicago)



Louis Kaplow (Harvard)


Ed Kleinbard (USC)



Vic Fleischer (San Diego)


Richard Ainsworth (BU)



James Hines (Michigan)


Paul Caron (Pepperdine)



Ed Kleinbard (USC)


Dan Shaviro (NYU)



Richard Kaplan (Illinois)


Louis Kaplow (Harvard)



Ted Seto (Loyola-L.A.)


William Byrnes (Texas A&M)



Katie Pratt (Loyola-L.A.)


David Weisbach (Chicago)



Richard Ainsworth (BU)


Robert Sitkoff (Harvard)



Robert Sitkoff (Harvard)


Omri Marian (UC-Irvine)



David Weisbach (Chicago)


Jeff Kwall (Loyola-Chicago)



Brad Borden (Brooklyn)


Steven Bank (UCLA)



Carter Bishop (Suffolk)


Yariv Brauner (Florida)



Chris Sanchirico (Penn)


David Gamage (Indiana)



Jen Kowal (Loyola-L.A.)


Jordan Barry (San Diego)



Francine Lipman (UNLV)


Francine Lipman (UNLV)



Dan Shaviro (NYU)


Brad Borden (Brooklyn)



Bridget Crawford (Pace)


Bridget Crawford (Pace)



Dennis Ventry (UC-Davis)


Michael Graetz (Columbia)



David Walker (Boston Univ.)


Brian Galle (Georgetown)



Steven Bank (UCLA)


Christopher Hoyt (UMKC)



Gregg Polsky (Georgia)


Vic Fleischer (San Diego)


Note that this ranking includes full-time tax professors with at least one tax paper on SSRN, and all papers (including non-tax papers) by these tax professors are included in the SSRN data.

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February 28, 2017 in Scholarship, Tax, Tax Prof Rankings | Permalink | Comments (0)

CBO:  U.S. Is On Path To Highest Budget Deficits And Debt In Our History

Congressional Budget Office, CBO’s Assessment of the Long-Term Budget Outlook and Its Approach to Dynamic Analysis:

If current laws governing federal taxes and spending did not change, the United States would face steadily increasing federal budget deficits and debt over the next 30 years, according to projections by CBO. As a result, CBO estimates, public debt would reach 145 percent of GDP by 2047, higher than any percentage previously recorded in the United States.


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February 28, 2017 in Congressional News, Tax | Permalink | Comments (0)

Professors And Politics: What The Research Says

Following up on my previous posts (links below):  Inside Higher Ed, Professors and Politics: What the Research Says:

When Betsy DeVos on Thursday accused liberal faculty members of trying to force their views on students, the new education secretary infuriated many professors — and won praise from some conservatives. Most faculty members who weighed in on social media denied the indoctrination and unfairness charges. While not disputing her assertion that they are more likely than others to be liberal, they said it was unfair to say that this meant they were indoctrinating anyone. Many conservatives who applauded DeVos said their personal experiences (or those of their children, nieces, nephews, etc.) showed she was correct.

For all the back-and-forth of traded anecdotes, there is research on these subjects — in peer-reviewed articles, books published by scholarly presses and so forth. And most of these studies reach a consensus.

Yes, professors lean left (although with some caveats). But much of the research says conservative students and faculty members are not only surviving but thriving in academe — free of indoctrination if not the periodic frustrations. Further, the research casts doubt on the idea that the ideological tilt of faculty members is because of discrimination. Notably, some of this research has been produced by conservative scholars.

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February 28, 2017 in Legal Education | Permalink | Comments (1)

Mason:  Tax Rulings As State Aid FAQ

Ruth Mason (Virginia), Tax Rulings as State Aid FAQ, 154 Tax Notes 451 (Jan. 23, 2017):

In this report, the first in a series of reports on EU state aid, Mason provides background on state aid law as it applies to income taxes, including the legal standard, recovery mechanism, and case selection by the Commission.

February 28, 2017 in Scholarship, Tax | Permalink | Comments (0)

Monday, February 27, 2017

Law Profs Debate Prevalence Of Ideological Discrimination In Faculty Hiring At Chicago-Kent, Other Law Schools

Chicago-KentFollowing up on my previous posts (links below):  one current and one former Chicago-Kent law professor debate the prevalence of discrimination against conservative/libertarian candidates in law faculty hiring:

Ralph Brill (Chicago-Kent, 1961-current):

I have never seen evidence at my school, nor at any of the schools I have inspected for the ABA, of a concerted effort to bar possible hires based on their political beliefs. Several of the signers of the letter have been on our faculty in fact. I think that most of the people who seek teaching jobs tend to be liberal but only because the conservatives are much more apt to stay in law firms and move up to much more lucrative partnerships. Pay scales in law schools do not match up well against what one can earn in private practice.

James Lindgren (Chicago-Kent, 1990-96; Northwestern, 1996-current):

Response to Ralph Brill (of Chicago-Kent):

I was on the Chicago-Kent faculty from 1990-96, and served on the appts. committee for many of those years (as a member, chair, or assoc. dean serving on the committee).

Chicago-Kent had an excellent record hiring libertarians and conservatives for only about 8 years in the 1980s, essentially ending around the time I was hired in 1990. That short spurt was partly because of the efforts of Randy Barnett who pushed the school to hire on both sides of the spectrum.

Since I was hired at Chicago-Kent in 1990, Ralph, how many conservatives, libertarians—or even moderate Republicans—has Chicago-Kent hired? Ralph, how many current C-K faculty hired since 1990 do you know who voted for any of the last three Republican presidential candidates? Do you think that maybe part of the reason that Chicago-Kent’s amazing improvement plateaued in the early to mid-1990s was that it ceased to do substantial hiring on the right half of the political landscape?

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February 27, 2017 in Legal Education | Permalink | Comments (4)

Manhire:  Unknowable Unknowns Of Tax Reform — Wicked Systems, Cloud Seeding, And The Border Adjustment Tax

Better Way (2017)Jack Manhire (Texas A&M), Unknowable Unknowns of Tax Reform: Wicked Systems, Cloud Seeding, and the Border Adjustment Tax:

This brief comment explores just one of the "unknowable unknowns" concerning the border-adjustment tax proposal in the House Republican Blueprint.

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February 27, 2017 in Scholarship, Tax | Permalink | Comments (2)

Call For Proposals: Association For Mid-Career Tax Law Professors (March 1 Deadline)

The Association for Mid-Career Tax Law Professors (“AMT”) has issued a Call for Proposals:

MCThe AMT organizing committee — Jennifer Bird-Pollan (Kentucky), Miranda Fleischer (San Diego), Will Foster (Arkansas), Brian Galle (Georgetown), and Susie Morse (Texas) — welcomes proposals for our annual conference.

AMT is a recurring conference intended to bring together relatively recently-tenured professors of tax law for frank and free-wheeling scholarly discussion. Our third annual meeting will be held on Monday and Tuesday, May 22 and 23, 2017, on the campus of the University of Arkansas School of Law in Fayetteville, Arkansas. We’ll begin early on Monday and adjourn by noon on Tuesday.

2015 Conference at Ohio State (Day 1, Day 2)
2016 Conference at UC-Davis (Day 1, Day 2)

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February 27, 2017 in Scholarship, Tax, Tax Conferences | Permalink | Comments (0)

California Legislator Proposes New Law School: UC-Riverside

Ucr_logoThe Recorder, California Needs Another Law School, State Legislator Says:

One week after California’s state bar leader declared a “crisis” in legal education due in part to a decline in student applicants, a first-year lawmaker has introduced legislation endorsing the creation of a new law school at UC Riverside.

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February 27, 2017 in Legal Education | Permalink | Comments (3)

University Of Oregon Withholds From Public Discipline Of Tax Prof Nancy Shurtz For Wearing Blackface To Halloween Party


Register-Guard, University of Oregon Secrecy Keeps Shroud Over Actions Related to Law Professor and Assistant Offensive Coach:

During the past four months, the University of Oregon encountered two unprecedented high-­publicity crises with its employees.

Late last year, a law professor donned a Halloween costume that included blackface for a party at her house — sparking widespread outrage and defense of free speech.

Early this year, a newly hired assistant football coach was ­arrested on drunken driving charges in downtown Eugene — drawing ­public attention to a football program that new head coach Willie Taggart was striving to resuscitate and put a happy face on.

The UO took action on both the law professor and assistant coach, but the public may never know the details, because UO ­lawyers ­maintain that the public has no right to inspect the disciplinary records of these and many other UO employees.

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February 27, 2017 in Legal Education, Tax | Permalink | Comments (2)

2016 San Diego Grad Sues Twitter, Law School For $100 Million Over Parody Account That Mocked Her Pro-Trump Political Views

DehenTech Dirt, Recent Law School Grad Sues Twitter Because Someone Made A Parody Twitter Account:

Another day, another wacky legal complaint. This one, first spotted by Eric Goldman was filed by a recent law school grad, Tiffany Dehen (FacebookTwitter; LinkedIn; Instagram). She's fairly upset that someone set up a parody Twitter account pretending to be her that portrayed her in an unflattering light. So she has sued. For $100 million. And she's not just suing the "John Doe" behind the account... but also Twitter. Oh, and also the University of San Diego, because she's pretty sure that someone there is responsible for this account (she just graduated from USD's law school). Oh, and according to the exhibits that Dehen put in her own lawsuit, the account is labeled as a parody account.

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February 27, 2017 in Legal Education | Permalink | Comments (3)

Blackman:  The First Step To Addressing The Political Imbalance Of Law School Faculties Is For The AALS To Acknowledge There Is A Problem

AALS (2018)Following up on my previous posts (links below): Josh Blackman (South Texas), The First Step To Improving Intellectual Diversity, Is To Acknowledge There Is A Problem:

Debates over the lack of intellectual diversity on law school campuses usually deadlock in one of three ways. ... Fortunately, there is a way to resolve this deadlock. The American Association of Law Schools (AALS) maintains extensive records of applicants on the entry-level hiring market through the Faculty Appointments Register (FAR). With proper protections for confidentiality, scholars can systematically compare the intellectual diversity of the applicant pool, with those in fact hired for tenure-track positions. The AALS granted access to the 2007 FAR registry to Professors Trace E. George and Albert H. Yoon. Their research considered how hiring was impacted by an applicant’s race, gender, clerkship, alma mater, advance degrees, and other factors. (Among their findings, “at the intermediate call-back interview stage … women and non-whites are statistically significantly more likely to be invited for a job talk interviews,” but are “no more likely than similarly situated men and whites to get a job offer.”). George and Yoon’s important work, however, did not focus on intellectual diversity.

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February 27, 2017 in Legal Education | Permalink | Comments (2)

TaxProf Blog Weekend Roundup

Sunday, February 26, 2017

A Taxing Oscars:  $100,000 Swag Bags (66% Decrease From Last Year)

Buchanan:  Section 6103(f)(5) Does Not Permit An IRS Whistleblower To Release Trump's Tax Returns

Trump Tax ReturnsFollowing up on my previous posts (links below):  Newsweek: Why Trump's Tax Returns Are Going to Stay Secret, by Neil Buchanan (George Washington):

One interesting question that has arisen is whether another provision in [section 6103(f)] of the tax code might provide a different legal avenue that could result in the release of Trump's returns. Whereas section 6103(f)(1) gives the Republican chairmen of the relevant committees the legal ability to say no if they are hellbent on protecting their man, section 6103(f)(5) is a whistleblower provision that cannot be blocked by [House Ways & Means Committee Chair Kevin] Brady or anyone else.

Specifically, this provision specifies that anyone who has had access to tax information "may disclose such return or return information to" the relevant congressional committees "if such person believes such return or return information may relate to possible misconduct, maladministration, or taxpayer abuse." This means that all members of the committees would receive the information, whether Kevin Brady or Orrin Hatch liked it or not.

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February 26, 2017 in Tax | Permalink | Comments (2)

How Not To Address Liberal Bias In Academia

Following up on my previous posts (links below):  Bloomberg View: How Not to Address Liberal Bias in Academia, by Megan McArdle:

Politically, academia is about as unbalanced as Norman Bates. Attempts to justify it contain eerie echoes of a 1950s CEO explaining why blacks and women simply weren’t qualified to ever do anything more taxing than make coffee and sweep floors.

I have argued about this topic before, and I am not going to rehash. Accept, arguendo, that academia isn’t balanced. The problem is bigger in some disciplines, smaller in others, but there’s nowhere that the skew doesn’t show up to some extent. Nor is it simply caused by academia hewing to its good old empirical priors while American politics moves wildly in other directions; academia has moved sharply to the left. What should we do about it?

Well, the first thing we should consider doing is “nothing.” As a public policy choice, "nothing" is far too often undervalued — indeed, often ignored. But as I like to say, the existence of a problem does not imply the existence of a solution. It does not guarantee that any plausible cure will be better than the disease.

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February 26, 2017 in Legal Education | Permalink | Comments (3)

The 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 #1 paper and a paper returning to the list at #4:

  1. [1,277 Downloads]  The Known Unknowns of the Business Tax Reforms Proposed in the House Republican Blueprint, by Michael J. Graetz (Columbia)
  2. [713 Downloads]  A Guide to the GOP Tax Plan — The Way to a Better Way, by David A. Weisbach (Chicago)
  3. [347 Downloads]  Accounting for Behavioral Considerations in Business Tax Reform: The Case of Expensing, by Lily L. Batchelder (NYU)
  4. [336 Downloads]  Destination-Based Cash-Flow Taxation: A Critical Appraisal, by Wei Cui (British Columbia)
  5. [317 Downloads]  How Donald Trump can Keep His Campaign Promises, Grow the Economy, Cut Tax Rates, Repatriate Offshore Earnings, Reduce Income Inequality, Keep Jobs in the United States, and Reduce the Deficit, by David S. Miller (Proskauer, New York)

February 26, 2017 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

Supreme Court To Decide Fate Of Canada's First Christian Law School: Does Religious Freedom To Ban Student Sex Outside Of Heterosexual Marriage Trump LGBTQ Rights?

Canadian LawyerFollowing up on my previous posts (links below):  Toronto Globe and Mail, Supreme Court to Hear Appeals About Trinity Western University Law School:

The Supreme Court of Canada agreed Thursday to hear two appeals involving a private Christian university that demands all students sign a code of conduct forbidding sexual intimacy outside heterosexual marriage.

Trinity Western University has been seeking accreditation in all provinces for future graduates of its proposed law school but has faced pushback from law societies in Ontario, British Columbia and Nova Scotia over its controversial conduct code.

The Ontario and British Columbia cases, which pit religious freedom against equality rights, are now before the country’s top court.

Trinity Western’s “community covenant” or code of conduct requires students to abstain, among other things, from obscene language, harassment, lying, stealing, pornography, drunkenness and sexual intimacy “that violates the sacredness of marriage between a man and a woman.”

Critics say it discriminates against people in the LGBTQ community who are looking to enter the legal profession.

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February 26, 2017 in Legal Education | Permalink | Comments (1)

Saturday, February 25, 2017

This Week's Ten Most Popular TaxProf Blog Posts

28 Conservative/Libertarian Law Profs Demand That AALS Address Political Imbalance Of Law School Faculties

AALS (2018)Following up on my previous posts:

The Volokh Conspiracy: Our Letter to the Association of American Law Schools, by Randy Barnett (Georgetown):

Recently, the former-Provost of Stanford University, John Etchemendy, gave a speech entitled The Threat From Within in which he observed:

Over the years, I have watched a growing intolerance at universities in this country – not intolerance along racial or ethnic or gender lines – there, we have made laudable progress. Rather, a kind of intellectual intolerance, a political one-sidedness, that is the antithesis of what universities should stand for. . . . We need to encourage real diversity of thought in the professoriate, and that will be even harder to achieve. It is hard for anyone to acknowledge high-quality work when that work is at odds, perhaps opposed, to one’s own deeply held beliefs. But we all need worthy opponents to challenge us in our search for truth. It is absolutely essential to the quality of our enterprise.

As it happens, for several years, a group of conservative and libertarian law professors from a variety of law schools has quietly been urging the Association of American Law Schools, which has taken a leadership role in addressing racial and gender diversity—including by establishing a Racial Diversity Task Force in 1999—to do the same with viewpoint or political diversity. Our complaint was not limited to the gross political one-sidedness of the Annual Meeting of the AALS, but primarily concerned the gross political imbalance of law faculties—especially in such subjects as public law where viewpoint most affects a professor’s legal scholarship and teaching.

Although we were treated respectfully—and some marginal, though welcome, steps were taken this year to diversify the annual AALS program—as the following letter to the AALS explains, our requests for concrete preliminary steps to address the existing pervasive imbalance of law faculties have apparently been denied. ...

Having worked patiently behind the scenes for several years, we believe it is time to make our complaint more public. To that end, I reproduce below our joint letter to the Executive Committee–drafted by Case Western Reserve law professor George Dent, who led our effort. (I will be happy to publish in this space any reply that the AALS may wish to make.)

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February 25, 2017 in Legal Education | Permalink | Comments (21)

Is Sixth Circuit Approval Of Funding Roth IRAs With DISC Commissions A Harbinger Of Greater IRS Adherence To Language Of Tax Code?

Following up on last week's post, Sixth Circuit Reverses IRS, Tax Court: 'Citizens Can't Comply With Tax Laws They Can’t See':  Wall Street Journal Tax Report, The Secret to Avoiding Taxes on $6 Million: Exports and an IRA:

In less than a decade, two brothers turned a $3,000 investment into $6 million. Thanks to a federal appeals court, they won’t owe income taxes on this monster return.

To lower their taxes, the brothers paired a common retirement account with an obscure export incentive. The Internal Revenue Service challenged these moves in court, arguing that even if the transactions didn’t break the letter of tax law, they violated the spirit of it.

But the transactions were upheld by the U.S. Sixth Circuit Court of Appeals. The decision, Summa Holdings Inc. v. Commissioner, provides new ballast for taxpayers who use legal techniques in ways the Internal Revenue Service objects to. 

“It says that if there are two ways to structure a transaction and one incurs less tax, then the IRS can’t force the taxpayer into the other one,” says Robert Willens, an independent tax expert based in New York. ...

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February 25, 2017 in New Cases, Tax | Permalink | Comments (1)

Brooklyn Dean:  Donald Trump Is Causing A Legal Education Renaissance, Just As Woodward & Bernstein Inspired A Generation To Pursue Journalism Careers


Following up on my previous posts (links below):  The Hill op-ed:  An Unexpected Trump Effect: Lawyer as Hero, by Nicholas W. Allard (Brooklyn):

Almost single handedly, President Trump has made lawyers the breakout stars in the early days of his new administration.

Legal experts in immigration and refugee law, international trade, religious freedom, and the constitutional powers of the executive branch have, seemingly overnight, become regular guests on network and cable news, quoted on front pages of national newspapers, and gained thousands of followers on social media.

Law schools can seize this moment and, like the generation inspired by Woodward and Bernstein to pursue careers in journalism, lead the renaissance in legal education that would revive a profession in need of an injection of youth, idealism, and high-tech savvy.

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February 25, 2017 in Legal Education | Permalink | Comments (5)

Ainsworth:  Trump & VAT — NAFTA, Trade Barriers & Retaliatory Tariffs

Richard Ainsworth (Boston University), Trump & VAT: NAFTA, Trade Barriers & Retaliatory Tariffs:

During the first presidential debate President-elect Donald J. Trump argued that the value added tax (VAT) operated as a trade barrier to American business everywhere. He particularly pointed to the North American Free Trade Agreement (NAFTA). Mexico was a special concern. China was also a concern, but in this instance Trump was troubled both by China’s VAT and by China’s alleged currency manipulation.

This paper can only consider the VAT aspect of Trump’s trade policy. There appears to be some confusion about the operation of the VAT, particularly the border adjustment mechanism, and how US tariffs could “level the playing field.” The confusion needs to be cleared up.

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February 25, 2017 | Permalink | Comments (0)

Friday, February 24, 2017

Weekly Tax Highlight And Roundup

This week, Joe Kristan (CPA & Shareholder, Roth & Company (Des Moines, Iowa); Editor, Tax Update Blog) highlights the lesson of a recent Tax Court case:  friends shouldn't let friends claim the business bad debt deduction:

KristanYou can have a friend, or you can have a bad debt.

With friends like this, who needs deductions? When you lose money on an investment, a business bad debt deduction for the loss is the best consolation. A business bad debt is an ordinary loss, fully deductible against any other taxable income. A “non-business” bad debt, in contrast, is a capital loss, deductible only against capital gains, plus (for most individuals) $3,000 of other income. If the investment isn’t a loan, the best you can hope for is a capital loss.

The best result is the hardest to get, as a Virginia financial advisor learned in Tax Court this week. The advisor had a friend, a Mr. Zinn, who ran a business negotiating reduced interest rates for credit card borrowers with high balances. The advisor got involved in the business, called CFS, as Judge Lauber explains:

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February 24, 2017 in Tax, Weekly Tax Roundup | Permalink | Comments (0)

Weekly SSRN Tax Article Review And Roundup

This week, Daniel Hemel (Chicago) reviews a new working paper by David M. Schizer (Columbia), Subsidies and Nonprofit Governance: Comparing the Charitable Deduction with the Exemption for Endowment Income (Columbia Univ. Sch. of Law, Ctr. for Law & Econ. Studies, Working Paper No. 558, 2017).

HemelDavid Schizer’s new paper offers a fresh take on two long-running debates in tax law: should we allow a deduction for charitable contributions, and should we exempt the passive investment income of charities from tax? Schizer’s central claim is that the exemption (but not the deduction) distorts donors’ decisions as to the timing of charitable contributions—and, specifically, that the exemption inefficiently encourages donors to accelerate their giving. This post summarizes Schizer’s argument and then offers a reason why the deduction, at least in its current form, might distort donors’ decisions as to the timing of charitable contributions in the opposite direction.

The tax exemption for passive investment income earned by charities “creates an important inconsistency,” writes Schizer: “If donors keep an investment, their return (generally) is taxable. But if they donate the investment to charity, the return is no longer taxed” (p. 16). This gives the donor “a tax incentive to transfer assets to charities, and thus to give up control of these resources” (p. 20). That “can have two unfortunate effects,” according to Schizer: “it can erode the motivation and ability of charities to change with the times, and also can impede the ability of donors to monitor the performance of managers.” And while acknowledging that endowments might be desirable under some circumstances, Schizer writes that “it is hard to see why the tax law should put a thumb on the scale” (p. 24). 

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February 24, 2017 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (2)

Weekly Legal Education Roundup

Tax Policy In The Trump Administration

Fleischer Presents Subsidizing Charity Liberally Today At Columbia

Fleischer (Miranda)Miranda Perry Fleischer (San Diego) presents Subsidizing Charity Liberally at Columbia today as part of its Public Law Workshop Series hosted by David Pozen:

When visiting America over 150 years ago, Alexis De Tocqueville was amazed by the role of charities in American society. Since De Tocqueville’s visit, the sector’s size and influence have grown enormously. So too have the legal benefits accorded them, the most important of which are governmental subsidies in the form of exemption from the corporate income tax and the ability to receive tax-deductible contributions. Given the sector’s importance and the cost of these benefits, whether the sector’s legal treatment reflects our society’s broader ideals merits examination. More specifically, our Constitution enshrines two bedrock principles of Western liberal democracies: limited government and equal opportunity. Does the legal treatment of the charitable sector further these ideals, or undermine them?

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February 24, 2017 in Colloquia, Scholarship, Tax | Permalink | Comments (2)

Desai & Kleinbard:  A Workable Compromise For The Release Of President Trump's Tax Information

Trump Tax ReturnsFollowing up on my previous posts (links below):  Washington Post op-ed:  A Win-Win Path to Getting the Trump Tax Information That Really Matters, by Mihir Desai (Harvard) & Edward Kleinbard (USC):

President Trump’s spokespeople have made it perfectly obvious that he will not release his federal income tax returns during his presidency. Appeals to the tradition of presidents publishing their returns will not change this president’s resolve. Nor is a more forceful approach likely to pry the returns into public view.

As others have explained, Congress’s Joint Committee on Taxation, composed of the senior tax writers from the two political parties in both the House and the Senate, has the authority to examine the president’s tax returns in closed session. The committee can then report its findings or release those returns to the Congress as a whole (and thereby the public). The tax code is clear on this.

Democrats on the committee might leap at the chance, but Republican leadership plainly is not ready to confront the president here through unilateral demands. And yet the day may come soon enough that those leaders find it in their strategic interest to embrace this authority, if it can be asserted adroitly.

In the meantime, the public interest demands more than accepting the current stalemate. The path forward requires sensitivity to the president’s presumptive reasons for his tax disclosure reticence — in other words, compromise. ...

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February 24, 2017 in Tax | Permalink | Comments (4)

Pew:  How Governments Support Higher Education Through The Tax Code

Pew Charitable Trusts, How Governments Support Higher Education Through the Tax Code (2017):

To maximize the impact of higher education investments and achieve desired policy goals, policymakers should have knowledge of the full range of assistance provided to institutions and students. This means having an understanding of the billions of dollars made available through spending programs and the tax code. However, too frequently these two types of support are not considered in tandem, and most states lack the cost estimates they would need to determine how tax provisions for higher education compare in size to other postsecondary investments.

The federal government and the states each invested more than $70 billion in higher education-related spending programs, excluding loans, in academic year 2014, the latest year for which data are available. But that figure, as substantial as it is, does not paint a full picture of federal and state investments in higher education. It excludes the billions of dollars that the federal government and the 41 states plus the District of Columbia that levy personal income taxes provide to students and their families through tax expenditures—such as credits for tuition and college savings incentives—to help offset postsecondary costs.

Figure 1

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February 24, 2017 in Tax, Think Tank Reports | Permalink | Comments (1)

Minnesota Law Prof Francesco Parisi Accused Of Rape; His Lawyer Says Charges Are Frivolous

ParisiBrian Leiter (Chicago) has blogged the rape allegations against Minnesota law professor Francesco Parisi, whose lawyer calls the charges "frivolous":

Minneapolis Star Tribune, U Law School Prof Charged With Sex Assault, Stalking; Lawyer Said the 55-Year-Old Woman Has "Zero Evidence" of Her Accusations:

A University of Minnesota law professor engaged in years of protracted legal battles over real estate with the woman he is charged with sexually assaulting and stalking, according to court documents.

Francesco Parisi, 54, of Minneapolis, made his first appearance in Hennepin County District Court Wednesday on charges of first degree criminal sexual conduct and stalking. His bail was set at $350,000.

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February 24, 2017 in Legal Education | Permalink | Comments (3)

Thursday, February 23, 2017

Osofsky Presents Regulating By Example Today At Duke

Osofsky (2016)Leigh Osofsky (Miami) presents Regulating by Example, 35 Yale J. on Reg. ___ (2017) (with Susan C. Morse (Texas)), at Duke today as part of its Tax Policy Workshop Series hosted by Lawrence Zelenak:

Agency regulations are full of examples. Regulated parties and their advisors parse the examples to develop an understanding of the applicable law and to determine how to conduct their affairs. However, neither the legal nor theoretical literature contains any study of regulatory examples or explains how they might be interpreted. This Article fills this gap.

In this Article, we explore regulatory examples and set forth a theory for how to interpret them. We examine how regulatory examples, like common law cases, serve as data points that help communicate legal content. We argue that regulatory examples are best understood through analogical, or common law, reasoning, and illustrate this through a variety of examples.

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February 23, 2017 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Mehrotra Presents Law, Politics And The Rise Of Progressive Taxation (1877-1929) Tonight At UNLV

Mehrotra (2017)Ajay Mehrotra (American Bar Foundation & Northwestern) delivers the Philip Pro Lectures in Legal History at UNLV tonight on Making the Modern American Fiscal State: Law, Politics, and the Rise of Progressive Taxation, 1877-1929 (Cambridge University Press, 2013) (reviews)  (awards):

At the turn of the twentieth century, the U.S. system of public finance underwent a dramatic transformation. The late-nineteenth-century regime of indirect, hidden, partisan, and regressive taxes was eclipsed in the early twentieth century by a direct, transparent, professionally administered, and progressive tax system. This book uncovers the contested roots and paradoxical consequences of this fundamental shift in American tax law and policy. It argues that the move toward a regime of direct and graduated taxation marked the emergence of a new fiscal polity — a new form of statecraft that was guided not simply by the functional need for greater revenue but by broader social concerns about economic justice, civic identity, bureaucratic capacity, and public power.

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February 23, 2017 in Book Club, Colloquia, Scholarship, Tax | Permalink | Comments (0)

IRS Audit Rate Of Individuals (0.7%), Businesses (0.5%) Falls To 10+ Year Lows Due To Budget Cuts

Audit (2016)Wall Street Journal, IRS Audits of Individuals Drop for Fifth Straight Year:

U.S. tax audits of individuals declined for the fifth straight year in 2016 to reach the lowest level since 2003, showing the effects of budget cuts at the Internal Revenue Service.

The IRS, which has lost 30% of its enforcement staffing since the 2010 peak, audited 0.7% of tax returns in the fiscal year that ended Sept. 30, according to preliminary data released Wednesday. That means the IRS audited roughly 1 in every 143 individual tax returns, down from 1 in 90 back in 2010.

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February 23, 2017 in IRS News, Tax | Permalink | Comments (5)

Stanford Provost:  Academia Is Its Own Worst Enemy

Stanford (2016)John Etchemendy (Provost (2000-2017), Stanford), The Threat From Within:

Universities are under attack, both from outside and from within. ... But I’m actually more worried about the threat from within.

Over the years, I have watched a growing intolerance at universities in this country — not intolerance along racial or ethnic or gender lines — there, we have made laudable progress. Rather, a kind of intellectual intolerance, a political one-sidedness, that is the antithesis of what universities should stand for. It manifests itself in many ways: in the intellectual monocultures that have taken over certain disciplines; in the demands to disinvite speakers and outlaw groups whose views we find offensive; in constant calls for the university itself to take political stands. We decry certain news outlets as echo chambers, while we fail to notice the echo chamber we’ve built around ourselves.

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February 23, 2017 in Legal Education | Permalink | Comments (4)

Camp & Thuronyi:  An IRS Whistleblower Could Release Trump's Tax Return To Congress Under § 6103(f)

Trump Tax ReturnsFollowing up on my previous posts (links below):  Forbes, Disclosing President Trump's Tax Returns — An Unconventional Idea, by Bryan Camp (Texas Tech) & Victor Thuronyi (former Lead Counsel, (Taxation), IMF):

Lots of folks want to see Donald Trump’s tax returns. Conventional wisdom is that the returns cannot be disclosed unless he consents. That conventional wisdom is based on the general rule contained in 26 U.S.C. § 6103(a). The general rule forbids IRS employees (and some folks who receive information from IRS employees) from disclosing “return information.” That is a term of art that means not just tax returns but also just about anything in the IRS files.

Section 6103 is a really complex statute, mostly because of the exceptions to the general rule. The exceptions are found in subsections (c) through (o). These exceptions balance a taxpayer’s privacy with the needs of government officers and employees to do their jobs. So the exceptions to the general rule can get quite gnarly.

Several commentators have begun to explore some of the lesser-known exceptions to the general rule of nondisclosure. George Yin has a nice op-ed piece that explains one exception to the general rule in § 6103: Congress can ask for Trump’s returns. Andy Grewal also explores this idea in a well-done post over at the Yale regulation blog. Both posts are worth reading.

Both George and Andy focus on the power of certain congressional committees and staff to ask for tax returns as part of their oversight function. That power is found in § 6103(f)(1) through (f)(4). Democrats have acted on the ideas in George and Andy’s blogs. Stephen Ohlemacher from the AP reports that Democrats on the House Ways and Means Committee tried to get the committee to ask for Trump’s returns, but were outvoted by committee Republicans.

But what if the returns were dumped on the committee’s lap by an IRS employee without the Committee having made a request? That could happen under the very last paragraph in subsection (f).

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February 23, 2017 in Congressional News, IRS News, Tax | Permalink | Comments (1)

Hayashi & Murphy:  Savings Externalities In A Second-Best World

Andrew T. Hayashi (Virginia) & Daniel Patrick Murphy (Virginia), Savings Externalities in a Second-Best World:

The debate among legal scholars about individuals’ failure to save enough for retirement happens on a “micro” level. It focuses on the causes and consequences of undersaving from the perspective of individuals and analyzes how legal interventions, such as tax subsidies and nudges, can best address individual saving mistakes. This debate depends on certain assumptions about how the macroeconomy operates. When these assumptions do not hold, neither do the implications of the micro analysis, turning the conventional analysis of undersaving on its head. In fact, in a variety of circumstances, saving imposes a negative externality. Consequently, what looks like undersaving at the individual level may result in oversaving in the aggregate, and private vice may become a public virtue.

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February 23, 2017 in Scholarship, Tax | Permalink | Comments (0)

The Atticus Finch Effect: Has Donald Trump Made Attorneys (And Law Schools) Popular Again?


Following up on my previous posts (links below):  My Northwest, The Atticus Effect: Has Trump Made Attorneys Popular Again?:

Kellye Testy knew perceptions had shifted when, purely by accident, she bumped into a couple of her former students while having dinner in Seattle.

Testy, dean of the University of Washington School Of Law, said the two men — now attorneys — had just arrived at Seattle-Tacoma International Airport. Excited, they gushed to her that they had engineered the legal proceedings which grounded an aircraft and stopped U.S. immigration authorities from deporting legal immigrants in the hours following President Donald Trump’s controversial immigration ban. Then, as they loudly gabbed about the evening’s events, a surprising thing happened: The other diners broke out in applause.

“The whole restaurant was, ‘Woo hoo!’ and applauding these guys,” she recalled. “It was an amazing scene.” ...

The wave of pro-lawyer sentiment in the wake President Donald Trump’s election and subsequent executive orders and cabinet appointments has caught even the most thick-skinned, skeptical attorneys a little off-guard. ...

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February 23, 2017 in Legal Education | Permalink | Comments (1)

Soled:  The $250 Billion Price Tag Associated With Gift Tax Repeal

Jay A. Soled (Rutgers), The $250 Billion Price Tag Associated with Gift Tax Repeal, 154 Tax Notes 429 (2017):

For close to a century, many commentators, academics, and politicians have considered the gift tax as an important backstop to preserve the integrity of the nation’s estate tax. Indeed, in the absence of a viable gift tax, taxpayers could easily circumvent their estate tax obligations. But what these very same people often fail to realize is that the gift tax also serves an entirely different, yet significant purpose as well: it acts as an integral backstop to ensure the progressive nature of the nation’s income tax. Indeed, in the absence of a viable gift tax, taxpayers could easily circumvent their income tax obligations.

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February 23, 2017 in Scholarship, Tax | Permalink | Comments (0)

Wednesday, February 22, 2017

Iowa, North Carolina Bills Would Require 'Partisan Balance' In Faculty Hiring

Chronicle of Higher Education, Iowa Bill Would Force Universities to Consider Political Affiliation in Faculty Hiring:

Iowa’s public universities would have to base faculty-hiring decisions on applicants’ political-party affiliations under a bill pending before the State Senate’s Education Committee.

The measure, SF 288, would require the state’s three public universities to gather voter-registration data on prospective instructors and not make any hire that would cause either Democrats or Republicans on an institution’s faculty to outnumber each other by more than 10 percent. ...

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February 22, 2017 in Legal Education | Permalink | Comments (15)

Kara Getz Named Democratic Chief Counsel For House Ways & Means Committee

Ways & Means (2016)House Ways & Means Committee Ranking Member Richard Neal (D-MA) announced yesterday that Kara Getz has been named Chief Counsel for the committee:

“I have known Kara for many years and I am happy to welcome her back to the House in this Chief Counsel role,” said Ranking Member Neal. “Kara has proven herself to be an indispensable adviser to many Congressional leaders, and moving forward she will be absolutely integral to House Democrats’ efforts as she works on tax, trade, pension, and retirement policy.”

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February 22, 2017 in Congressional News, Tax | Permalink | Comments (0)

Snuggies Are Blankets, Not Garments, For Tax Purposes

Snuggie2Prior Probability, The Snuggies Case:

Have you seen those cheesy infomercials for Snuggies, those wearable fleece coverings–blankets with sleeves? Now, as a matter of tax law, is a Snuggie more like a blanket or more like a garment? (Blankets are subject to a lower import tax than articles of clothing are.) The United States Court of International Trade recently decided this close question, ruling that Snuggies are blankets for import tax purposes [citations omitted]:

Parties do not dispute that specifications, purchase orders, and invoices describe the Snuggie® as a blanket, and Allstar has trademarked "Snuggie®" to use on blankets and throws. The Snuggie® is marketed as a blanket, albeit one with sleeves. Retail packaging depicts people wearing the Snuggie® in the types of situations one might use a blanket; for example, while seated or reclining on a couch or bed, or outside cheering a sports team. The television commercial additionally shows a woman wearing a Snuggie® in place of a blanket that failed to sufficiently cover her. All of the above indicates that the Snuggie® is designed, used, and functions as a blanket, and is regarded in commerce and described in sales and marketing literature as a blanket.

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February 22, 2017 in Tax | Permalink | Comments (0)

Lawyers Could Be The Next Profession To Be Replaced By Computers

CNBC, Lawyers Could be the Next Profession to be Replaced by Computers:

Technology is often blamed for destroying traditional working-class jobs in sectors like manufacturing and retail.

But blue collar jobs aren't the only ones at risk.

The legal profession — tradition-bound and labor-heavy — is on the cusp of a transformation in which artificial-intelligence platforms dramatically affect how legal work gets done.

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February 22, 2017 | Permalink | Comments (4)

Should New York State Give President Trump’s Federal Tax Returns To Congress?

Trump Tax ReturnsBalkinization:  Does New York State Have a Copy of President Trump’s Federal Returns?, by Gregory Klass (Georgetown):

There has been a lot of talk about the new role state attorneys general have been taking on as a check on federal overreach. ... There is something else state attorneys general might do. It is now absolutely clear that the President will not release his federal tax returns.

Any state with a copy of those returns could choose to share them with Congress.

Section 6103(f)(1) of the Tax Code gives House Ways and Means Committee, the Senate Finance Committee, and the Joint Committee on Taxation the power to request individual returns from the IRS. Representative Bill Pascrell is a member of the House Ways and Means Committee. On February 1, he sent a letter to the Chairman, Republican Kevin Brady, requesting that that the Committee obtain from the IRS President Trump’s returns. Last week Brady rebuffed Pascrell.

But there is another option. Since 1998, another subsection of section 6103 has given whistleblowers permission to share federal returns with Congress. Section 6103(f)(5) provides:

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February 22, 2017 in IRS News, Tax | Permalink | Comments (5)

Lawyers For Adelsons, Magbanua Attack Prosecution's Case Against Their Clients In Dan Markel Murder

Markel SuspectsOrlando Sun Sentinel, 'That's What We Went to Go Kill That Man For': New Details Emerge in FSU Professor's Killing:

No one in the Adelson family has been arrested or charged in the case. The family, through its attorneys, has denied any involvement in Markel's death. "There is a reason that the police have not arrested any of the Adelsons — they weren't involved in Dan's death,” according to a statement released in August 2016 by attorneys representing the family.

David Oscar Markus, Charlie Adelson’s attorney, said Friday: “Even though Charlie wasn't involved, the prosecution has run a smear campaign against him and his family by using alternative facts created by people with quite a bit of time on their hands.” ...

Christopher DeCoste, one of Magbanua’s attorneys, said his client has done nothing wrong. "The prosecution created a theory fit for a soap opera, built a case around that preposterous plot using the wholly unreliable word of a thug as mortar, and peddled it through the media without mentioning any of the massive inconsistencies,” DeCoste said in a statement. “Before they turned Luis Rivera, a lifelong gangster, into their snitch, the threadbare circumstantial evidence wasn't even enough to arrest Katie.” ...

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February 22, 2017 in Legal Education | Permalink | Comments (5)

Racism In The Legal Academy: A Tale Of Two Law Professors

Racism In Academia (Not A Breaking Story), by LawProfBlawg (Anonymous Professor, Top 100 Law School):

This is a story of a traditional law school. It is a story I have heard many times at law professor gatherings around the country. It’s a story, which, while not true as a whole, is an amalgam of true experiences people have had being a person of color in academia. ...

As with many tragic tales, this story starts with a Dean. The Dean makes a genuine effort to promote diversity in a predominantly white faculty. The faculty’s new hire is a person of color. People of color now represent 5 percent of this school’s faculty. ...Let’s call the new hire Professor X. ...

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February 22, 2017 in Legal Education | Permalink | Comments (6)

ABA Tax Section Publishes New Issue Of Tax Times

ABA Tax Times (2016)The ABA Tax Section has published 36 Tax Times No. 2 (Feb. 2017)

February 22, 2017 in ABA Tax Section, Tax | Permalink | Comments (0)