Paul L. Caron

Friday, November 30, 2018

Weekly SSRN Tax Article Review And Roundup: Eyal-Cohen Reviews Estreicher & Wallace's Equitable Health Savings Accounts

This week, Mirit Eyal-Cohen (Alabama) reviews Samuel Estreicher (NYU) & Clint Wallace (South Caroline), Equitable Health Savings Accounts, 55 Harv. J. on Leg. ___ (2019):

Mirit-Cohen (2018)In light of recent reform debates, this Article timely provides a detailed analysis of Health Savings Accounts (HSAs). HSAs are designed to help control health costs while promoting the “patient-as-consumer model” and allowing taxpayers to select their desired healthcare provider.  Today, taxpayers enrolled in high-deductible health insurance plans receive “an above-the-line” tax deduction for contributions made to HSAs. These contributions are also deductible from the Federal Insurance Contributions Act (“FICA”) tax base and are not subject to Social Security and Medicare taxes (such deduction for FICA purposes is not available for 401(k) or IRA contributions). Generally speaking, high-deductible plans put patients’ personal funds at stake for ordinary healthcare costs, thus, increase the price sensitivity for healthcare services much more than in non-high-deductible plans with flat co-payments. The HSA funds can be utilized for any “qualifying medical expenses” including prescription drugs, doctors’ visits, and various procedures but excluding payments for medical insurance and over-the-counter medications. Any gains derived from investments made to HSAs are exempt from income tax if those funds are used to cover medical expenses. Funds in HSAs can be carried over from year to year, even if the taxpayer decides to switch to a plan that is not a high-deductible health plan. HSA withdrawals for non-healthcare spending are subject to income tax and an additional excise tax of 20%. The HSA model rests on the notion that by making patients price-aware and giving them greater control over their health spending, HSAs allow market forces to improve pricing and the healthcare delivery system as a whole.

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November 30, 2018 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)

Weekly Legal Education Roundup

Tax Policy In The Trump Administration

Legal Education Reform In India

Bloomberg Quint, How Can Law Schools In India Up The Ante?:

Indian law universities need to focus on practical and soft skills to prepare students for their career, was the sentiment echoed by a five-member panel of professors and recruiters, at an event co-hosted by the Harvard Law School Center on Legal Profession and the Law School Admission Council.

The panelists shared their insights on the future of legal education in India and the 3Cs they can work on — cost, curriculum, and career; on BloombergQuint’s weekly law and policy show – The Fineprint.

Legal education in India is more affordable than some of the other jurisdictions, given that most students are pursuing an undergraduate degree, said David Wilkins, director of the Center On Legal Profession at Harvard Law School. The real question is of value. What is the value that students are receiving and whether the education is preparing them for the jobs of the 21st century. ...

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November 30, 2018 in Legal Education | Permalink | Comments (1)

Dorothy Brown Receives Emory University Teaching Excellence Award

Brown (Dorothy) (2015)Emory Law Professor Dorothy Brown Receives Teaching Excellence Award:

Dorothy Brown has been selected to receive the Vulcan Teaching Excellence Award, given through the Georgia Independent College Association (GICA). The award recognizes outstanding faculty members who demonstrate strong academic skills in the classroom and provide leadership and support in the other areas of campus life.

Dorothy Brown is a nationally recognized scholar in tax policy, race, and class and has published extensively on the racial implications of federal tax policy. She is highly sought for her expertise in workplace inclusion issues, a respected speaker in the legal community, and a regularly engaged expert by media including CNN, National Public Radio, The New York Times, National Law Journal, The Washington Post and Forbes. She is currently working on a book entitled The Whiteness of Wealth.

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November 30, 2018 in Legal Education, Tax, Teaching | Permalink | Comments (1)

John Boalt's Primary Legacy Is A Racist Anti-Chinese Essay. Strip His Name From UC-Berkeley Law Already

UC Berkeley BoaltLos Angeles Times op-ed:  John Boalt's Primary Legacy Is a Racist Anti-Chinese Essay. Strip His Name From UC Berkeley Law Already:

The law school at UC Berkeley, after a yearlong review, has formally asked the chancellor to take the name “Boalt” off its building. The question remains, though, why John Henry Boalt’s name was ever affixed to University of California property in the first place.

A lawyer in late 19th century Oakland, Boalt’s primary legacy was a virulently racist essay that launched the campaign for the Chinese Exclusion Act of 1882, which banned immigration of Chinese laborers to the U.S. for more than 60 years. In “The Chinese Question,” Boalt allowed that the Chinese might be smarter than some native tribes and preferable to the “African Negro,” but “the Chinaman has brought to us and planted within our border all the vicious practices and evil tendencies of his home … .” He wrote that the “Caucasian and Mongolian” races were “separated by a remarkable divergence in intellectual character and disposition.” In Boalt’s view, the Chinese could not assimilate and the races should not associate with one another.

By contrast, UC Berkeley — and its law school in particular — were ahead of the curve on welcoming diversity. “From its inception, Berkeley Law, unlike many law schools of the period, was open to all qualified applicants, regardless of their gender, religion, or ethnicity,” brags the law school’s website.

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November 30, 2018 in Legal Education | Permalink | Comments (2)

Ohio Supreme Court: Cincinnati Reds Are Not Subject To Sales Tax On Bobblehead Giveaways

VottoCourt News Ohio, Reds Score Tax Exemption for Bobbleheads, Giveaways:

In a dispute between state tax officials and Cincinnati’s professional baseball team, the Ohio Supreme Court today quoted the team’s longtime radio announcer by declaring, “This one belongs to the Reds.” [Cincinnati Reds v. Testa, Slip Op. No. 2018-Ohio-4669 (Nov. 21, 2018)]

A divided Supreme Court determined the Cincinnati Reds were exempt from paying “use” tax on bobbleheads and other promotional items given to attendees at selected home games. The Court concluded the team successfully demonstrated that the cost of the items were factored into the cost of game tickets and counted as a tax-exempt “resale” of the items to fans.

Justice Patrick F. Fischer cited Reds announcer Marty Brennaman and several other sports figures as he delved deeply into the rich history of Ohio’s influence on professional baseball in the Court’s lead opinion. Because of the unique and undisputed evidence in the record, Justice Fischer cautioned that the ruling may not be applicable to other professional sports teams and organizations that sponsor promotional item giveaways. The Reds argued that rather than discount the ticket price to less-desirable games, the team factored a portion of ticket price to cover the costs of giveaways as a means to boost attendance.

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November 30, 2018 in Celebrity Tax Lore, Tax | Permalink | Comments (0)

Hamilton And The Internal Revenue Code


See also New York Times, ‘Hamilton’ and Heartache: Living the Unimaginable (Oct. 13, 2016). For more on my obsession with interest in Hamilton, see here and:

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November 30, 2018 in Legal Education, Tax | Permalink | Comments (0)

Thursday, November 29, 2018

Crane Reviews Zelenak's Figuring Out The Tax

Jotwell (Tax) (2016)Charlotte Crane (Northwestern), Learning From Our Mistakes (JOTWELL) (reviewing Lawrence Zelenak (Duke), Figuring Out the Tax: Congress, Treasury, and the Design of the Early Modern Income Tax (Cambridge University Press 2018)):

The income tax is a formidable institution in American political life. Understanding the many facets of its current form is a challenge, given the myriad forces that have interacted in its evolution. Larry Zelenak, in his book Figuring Out the Tax, published in January 2018 as part of the Cambridge Tax Law Series, offers the reader substantial insights into these forces through a close examination of the early history of the income tax in the United States.

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November 29, 2018 in Book Club, Scholarship, Tax | Permalink | Comments (0)

Moneyball For Law: Assessing Lawyer 'Soft Skills' That Predict Performance

Evolve the Law, Moneyball For Law: Assessing Lawyer "Soft Skills" That Predict Performance:

Like sabermetricians, Industrial and Organizational (I/O) Psychologists study human behavior in organizations. They use the five factor model of personality characteristics aka “the big five” to assess an individual’s personality traits. Studies show that strengths of certain personality traits can predict professional success. Generally, candidates are likely to be top performers across industries and jobs when scoring high on these traits:

  • Conscientiousness—a person’s ability to be organized, disciplined, achievement-oriented, and dependable.
  • Emotional resilience—a person’s ability to remain calm under pressure and adapt to stressful situations and people. ...

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November 29, 2018 in Legal Education | Permalink | Comments (2)

What Is The Optimal Tax On Red Meat?

Red MeatHealth Motivated Taxes on Red and Processed Meat: A Modelling Study on Optimal Tax Levels and Associated Health Impacts:

The consumption of red and processed meat has been associated with increased mortality from chronic diseases, and as a result, it has been classified by the World Health Organization as carcinogenic (processed meat) and probably carcinogenic (red meat) to humans. One policy response is to regulate red and processed meat consumption similar to other carcinogens and foods of public health concerns. Here we describe a market-based approach of taxing red and processed meat according to its health impacts.

Cato At Liberty, Against A Highly Regressive “Meat Tax”:

Last week, a report by University of Oxford academics calculated supposedly “optimal tax rates” on red meat (lamb, beef and pork) and processed meats (sausages, bacon, salami etc.) For the U.S., the recommend rates were as high as 34 percent and 163 percent, respectively. Such taxes, the report claims, could save 52,500 American lives per year. ...

To an economist, this approach might make theoretical sense. ... Yet, in reality, the presence of external effects is no slam-dunk to justify taxes. One must also consider costs, unintended consequences and the ability of government to assess risk and harm accurately. In these areas, the meat tax advocates appear off-base. The result is their proposed tax rates look way too high, even in theory, and it’s doubtful they are the best means of improving economic welfare.

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November 29, 2018 in Scholarship, Tax | Permalink | Comments (0)

Female Chairs Improve A Department's Gender Diversity And Equity

Inside Higher Ed, The Impact of Female Chairs:

It’s common advice: to increase faculty gender diversity, increase the gender diversity of institutional leaders. But what about department chairs, a kind of middle-management position -- do they make a difference? And beyond gender diversity, does having a female chair help improve the success of female academics?

The answer to much of the above is yes, according to a new working paper finding that in departments with female chairs, gender gaps in publication and tenure rates are smaller among assistant professors [Female Managers and Gender Disparities: The Case of Academic Department Chairs]. The pay gap also shrinks. After departments replace a male chair with a female chair, they see an increase of about 10 percent in the number of incoming female graduate students, with no change in students’ ability levels.

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November 29, 2018 in Legal Education | Permalink | Comments (1)

The 2017 Tax Act’s Potential Impact On Bank Safety And Capitalization

Mark J. Roe (Harvard) & Michael Troege (ESCP-Europe), The 2017 Tax Act’s Potential Impact on Bank Safety and Capitalization:

Much has been written and discussed in banking circles about recent rollbacks in prudential regulation, with some seeing the rollbacks as unsafe and others seeing them as allowing stronger financial action. Undiscussed is that the basic taxation of the corporation in the United States — and banks are taxed like ordinary corporations — has a profound impact on the level of debt and equity throughout the economy and in the banking system in particular, and that recent changes to the tax code could affect bank safety, stability, and capitalization levels.

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November 29, 2018 in Scholarship, Tax | Permalink | Comments (0)

Generation Z Goes To Law School: Teaching And Reaching Law Students In The Post-Millennial Generation

Laura P. Graham (Wake Forest), Generation Z Goes to Law School: Teaching and Reaching Law Students in the Post-Millennial Generation, 41 U. Ark. Little Rock L. Rev. ___ (2018):

In 2017, law schools welcomed the first members of Generation Z to their halls. While Generation Z students (born between 1995 and 2010) share some commonalities with their predecessors, the Millennials, they have a distinct peer personality that has been shaped by the culture and events of their youth. This Article begins with the premise that legal educators would benefit from learning what makes Generation Z students “tick,” so that we can partner with them more effectively as they prepare to enter the legal profession.

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November 29, 2018 in Legal Education | Permalink | Comments (1)

Scientific American: The Science Of Inequality

Scientific American (2018)Scientific American, The Science of Inequality:

How high economic inequality negatively impacts nearly every aspect of human well-being—as well as the health of the biosphere.

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November 29, 2018 in Tax | Permalink | Comments (2)

The Rise Of The Creative Law School

Gregory W. Bowman (Dean, West Virginia), The Rise of the Creative Law School, 50 U. Tol. L. Rev. ___ (2018):

U.S. legal education is currently experiencing rapid and massive change that is both destabilizing and disconcerting. Across the nation, law schools face enormous challenges and a future filled with programmatic and financial uncertainty. This essay uses the work of urbanist Richard Florida to discuss these challenges and suggest ways to develop paths forward that best benefit law students, the public, and law schools themselves.

November 29, 2018 in Legal Education | Permalink | Comments (0)

Wednesday, November 28, 2018

Oh Presents The Effects Of Capital Gains Rate Uncertainty On Realization Today At Pennsylvania

OhJason Oh (UCLA) presents The Effects of Capital Gains Rate Uncertainty on Realization (with David Kamin (NYU)) at Pennsylvania today as part of its Tax Law and Policy Workshop Series hosted by Michael Knoll, Chris Sanchirico, and Reed Shuldiner:

Taxpayers should expect capital gains rates to fluctuate in light of frequent historical changes and the current divergence of rates preferred by Democrats and Republicans. This paper is the first to model the effect of such rate uncertainty on the realization incentives of asset holders and finds those effects to be potentially large. There are several implications. First, rate uncertainty may alleviate the lock-in effect of the realization rule when rates are low and exacerbate lock-in when rates are high. Second, there could be significant inaccuracies extrapolating the elasticity of capital gains realizations measured at one rate to another. Third, some policy solutions aimed at addressing distortions created by the realization rule may not work as well as expected.

November 28, 2018 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

How To Grow A Lawyer: A Guide For Law Schools, Law Professors, And Law Students

How To Grow A LawyerE. Scott Fruehwald, How to Grow A Lawyer: A Guide for Law Schools, Law Professors, and Law Students (2018):

We live in a world of accelerating change. Yet, legal education still relies mainly on a teaching approach developed in 1870. Is this any way to grow a lawyer?

Law schools need to radically transform legal education. They must base this transformation on research of education scholars both within and without legal education. They must reject everything from the past that does not grow effective lawyers.

This book shows how law schools and law professors can use the new scholarship to become better teachers and how they can help their students become better learners. In brief, legal education should involve active learning, teaching students metacognition, and formative assessment. This book contains exercises, particularly reflection exercises, at the end of each subsection to help the reader better absorb the new approaches to teaching and learning.

November 28, 2018 in Book Club, Legal Education, Scholarship, Teaching | Permalink | Comments (0)

UC-Davis Funds Faculty Searches Focused On Diversity, Not Disciplinary Expertise

UC Davis University Logo (2018)Inside Higher Ed, Open Searches and Diversity:

Hoping to increase faculty diversity, UC Davis is holding eight open searches focused on candidates' contributions to diversity, instead of narrow disciplinary expertise.

The University of California, Davis, is launching a pilot hiring program that eliminates the requirement — typical in department searches — that candidates have a specific disciplinary specialty. Davis says the research-backed approach will help it increase faculty diversity. ...

Davis is funding the program with some $422,000 of a $7 million University of California System-wide investment in faculty diversity, in addition to existing campus funds.

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November 28, 2018 in Legal Education | Permalink | Comments (4)

Assessing Academic Law Libraries' Performance And Implementing Change While Reducing Budget

Linda Kawaguchi (Chapman), Assessing Academic Law Libraries' Performance and Implementing Change: The Reorganization of a Law Library, 49 U. Tol. L. Rev. 35 (2017):

The confluence of the crisis in legal education and the evolution of legal information presents the perfect opportunity for law schools to actively decide what the role of the law library should be, and to make considered, deliberate changes based on the best interests of the institution. The Dale E. Fowler School of Law at Chapman University recognized the opportunity to strengthen the institution by creating, essentially, a brand new law library.

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November 28, 2018 in Legal Education | Permalink | Comments (0)

Pepperdine Law Rises From The Ashes: Better, Stronger, United

Pepperdine Law reopened on Monday after being closed for 17 days due to the Woolsey Fire. I was hugely disappointed that I was unable to welcome students, staff, and faculty back to campus. I spent Saturday evening in the UCLA Hospital ER and learned that I had detached retinas in both eyes. I had emergency eye surgery on Monday and am now on my way to a full and speedy recovery.  

The 17-day closure forced us to institute a compressed class and exam period. Our leadership team worked tirelessly to ease the burden on everyone by creating a week-long schedule of community activities. Monday featured a full breakfast and lunch followed by a Deans Forum. Because I could not attend in person, we displayed my doppelganger in the form of a 6-foot cardboard cut-out

Launch 1

My dear friend and Dean of Students, Naomi Goodno, read the following statement from me while standing in front of my double:

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November 28, 2018 in Ari Glogower, Legal Education | Permalink | Comments (3)

Clausing: Profit Shifting Before And After The Tax Cuts and Jobs Act

Kimberly A. Clausing (Reed College), Profit Shifting Before and After the Tax Cuts and Jobs Act:

In recent years, estimates of profit shifting by multinational companies have indicated substantial revenue costs to the U.S. government, likely in excess of $100 billion per year. The Tax Cuts and Jobs Act (TCJA) has changed the climate for profit shifting in several important ways: the lower U.S. corporate rate should lower the incentive to shift profits away from the United States, while “territorial” tax treatment (of some income) and the removal of tax upon repatriation should raise the incentive to shift profits abroad. In addition, several novel base protection measures, in particular the GILTI and the BEAT, are aimed directly at profit shifting. This paper evaluates tax law changes under the TCJA, discussing their likely effect on the magnitude of profit shifting. Estimates suggest that, once adjustment to the legislation is complete, it should reduce the U.S. affiliate corporate tax base in haven countries by about 20 percent, increasing the tax base in both the United States and in higher-tax foreign countries. Still, positive U.S. tax revenue effects are likely to be modest due to the design of the provisions.

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November 28, 2018 in Scholarship, Tax | Permalink | Comments (0)

Creative Initiatives At U.S. Law Schools

Christine Cimini (University of Washington), Roberto Corrada (Denver), Myra Berman (Touro), Christine Cerniglia (Stetson), Katherine Kruse (Mitchell Hamline), Creative Initiatives at U.S. Law Schools, 7 Elon L. Rev. 1 (2015):

Creative initiatives and programs that address problems in legal education are underway at many law schools. Some are entirely new in design and aim, running the gamut from full programs to individual innovative courses. Other initiatives build on or give new direction to existing programs, such as clinics and externships. Others are designed to address the costs and time commitment associated with a traditional three-year JD. The breadth and variety of these many efforts signal that law schools hear, take seriously, and are responding to criticisms being leveled at legal education. This report begins the process of identifying and cataloging creative programmatic initiatives in law schools.

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November 28, 2018 in Legal Education | Permalink | Comments (0)

Call For Proposals: IRS Statistics of Income Research Program

IRS Logo 2Call for Proposals:

Through its Joint Statistical Research Program (JSRP), the Statistics of Income (SOI) seeks to enable the use of tax microdata by qualified researchers outside the Federal government. Such research can provide new insights and advance the understanding of the ways that existing tax policies affect individuals, businesses, and the economy. It can also provide a new understanding of taxpayer behavior that can aid in the administration of the U.S. tax system. Finally, such research can lead to the development of new datasets useful for future tax administration research, as well as new tabulations that can be released to the public. SOI is a division of the IRS’s Research, Applied Analytics, and Statistics (RAAS) office.

The following subjects are of particular interest to the IRS and the tax research community:

  • Tax administration in a global economy
  • Taxpayer needs and behavior, particularly the roles of information, complexity, salience, engagement, and compliance costs
  • Filing, payment, and reporting compliance measures, behaviors, and drivers
  • Taxpayer response to policy changes, particularly taxpayer responses to changes in incentives
  • Role of complex business structures in tax planning
  • Application of new research methods for tax administration, particularly data science, behavioral insights, or other interdisciplinary approaches

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November 28, 2018 in IRS News, Tax | Permalink | Comments (1)

Tuesday, November 27, 2018

Satterthwaite Presents Entrepreneurs' Legal Status Choices And The C Corporation Penalty At Boston College

SatterthwaiteEmily Satterthwaite (Toronto) presents Entrepreneurs' Legal Status Choices and the C Corporation Penalty today at Boston College today as part of its Tax Policy Workshop Series hosted by Jim Repetti, Diane Ring, and Shu-Yi Oei:

Foundational to the American Dream is the ability to easily and rapidly start a new business. Over the past quarter century, the introduction of the limited liability company (LLC) has dramatically shifted the choice-of-legal-status calculus, and in its wake a consensus against the use of traditional C corporations by non-venture-backed start-ups has emerged.  The C corporation, scholars argue, has fatal drawbacks: tax disadvantages as well as governance inflexibility.  Due to historically limited sources of data, there has been little empirical research on choice-of-entity generally and none that explores the anti-C corporation thesis in particular.  Do C corporations under-perform as compared to similarly-situated businesses with alternative legal statuses?  This paper exploits a large panel dataset that contains legal status, owner, business, financing, and other firm-specific information collected from an eight-year panel survey of nearly five thousand enterprises that were formed in 2004.  The paper presents four main results. 

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November 27, 2018 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Eight Innovative Ideas From Law Schools

Legal Tech News, You Think Legal Education Can’t Change? 8 Innovative Ideas from Law Schools:

  1. BYU:  LawX Eviction Cases
  2. Cleveland-Marshall:  Global Legal Blockchain Consortium
  3. Cornell:  Legal Aid Apps
  4. Florida:  e-Discovery in China
  5. Harvard:  Legal Hackathon
  6. Harvard:  Caselaw Access Project
  7. Hofstra:  Legal Tech Bootcamp
  8. Vanderbilt:  V-Legal Executive Online Certificate

November 27, 2018 in Legal Education | Permalink | Comments (0)

More Students Are Taking Time Off After College Before Law School

PennDaily Pennsylvanian, Instead of Heading Straight to Law School, More Students Are Taking Time Off After College:

Penn Law students are taking time off after college graduation at a higher rate than in previous years, following a national trend toward delaying law school to join the workforce temporarily. ... Of the current first-year students at Penn Law, 75 percent have spent one or more years out of school before enrolling in law school.  ...

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November 27, 2018 in Legal Education | Permalink | Comments (0)

The Number Of Americans Renouncing Their U.S. Citizenship Remains Flat

International Tax Blog, 2018 Third Quarter Published Expatriates — A Total of 1,107:

Today the Treasury Department published the names of individuals who renounced their U.S. citizenship or terminated their long-term U.S. residency (“expatriated”) during the third quarter of 2018.

The number of published expatriates for the third quarter was 1,107. The numbers for the last three quarters have essentially been flat (1,099, 1,090, and 1107). As we mentioned last quarter, the numbers seem to be leveling off or dropping. This can be seen by the 4-quarter moving average red line shown on the chart below.


November 27, 2018 in Tax | Permalink | Comments (0)

Princeton Review's Best 165 Law Schools (2019 Edition)

Princeton ReviewThe Princeton Review has published the 2019 edition of The Best 165 Law Schools (press release) (FAQs) (methodology):

The Princeton Review tallied its lists based on its surveys of 17,700 students attending the 165 law schools [an average of 107 per school] in 2015-16, 2016-17, and 2017-18. The 80-question survey asked students to rate their schools on several topics and report on their experiences. Some ranking list tallies also factored in school-reported data.

Best Professors:  Based on student answers to survey questions concerning how good their professors are as teachers and how accessible they are outside the classroom.

  1. Virginia
  2. Duke
  3. Chicago
  4. Stanford
  5. Washington & Lee
  6. Notre Dame
  7. Pepperdine
  8. Boston College
  9. Vanderbilt
  10. Boston University

Best Quality of Life:  Based on student answers to survey questions on: whether there is a strong sense of community at the school, whether differing opinions are tolerated in the classroom, the location of the school, the quality of social life at the school, the school's research resources (library, computer and database resources).

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November 27, 2018 in Law School Rankings, Legal Education, Pepperdine Legal Ed | Permalink | Comments (1)

The IRS Hired Private Debt Collectors Who Are Failing To Meet Goals While Squeezing Poor People And Hurricane Victims

IRS Logo 2Quartz, The IRS Hired Private Debt Collectors Who Are Squeezing Poor People and Hurricane Victims:

An IRS program using private debt collectors to handle delinquent tax bills is improperly demanding payment from hurricane victims and squeezing some of the poorest Americans—all the while turning a profit far below industry standards.

Since April 2017, four debt collection companies have been assigned half a million delinquent taxpayers to contact. So far, they’ve brought in less than 1% of what Congress hopes the program will ultimately generate. Meanwhile, tax experts and the IRS’ own oversight board fear that the targeted taxpayers are being pressured to empty out their savings and take on unnecessary financial risk. The National Taxpayer Advocate, an independent office within the IRS that ensures “every taxpayer is treated fairly,” calls the program ”a serious threat to taxpayer rights.”

Two US senators pushed the IRS to outsource its debt collection to private companies through this program: Chuck Grassley, a Republican from Iowa, and Chuck Schumer, a Democrat from New York who has hailed the initiative for bringing jobs to one of the poorest parts of his state. As if by coincidence, three of the four debt-collecting companies contracted by the IRS are based in Iowa and New York. They declined to comment on the program.

The IRS normally brings in $4 for every $1 put into its budget. But the private collectors don’t appear to be as effective as their government counterparts. From Oct. 2017 to Sept. 2018, the program’s most profitable 12 months, collection companies Pioneer Credit Recovery, ConServe Debt Recovery, Performant Recovery, and CBE Group collected just $2.64 for every $1 the government spent on the program.

The program hasn’t even met the private debt-collection industry’s own financial standards. By June 2018, the companies had recovered just 1% of the of the $4.1 billion in receivables assigned to them, according to a recent report by the Treasury Inspector General for Tax Administration (TIGTA). The industry average collection rate is 9.9%.

And of the total $88.8 million in revenue that the companies did manage to collect, the IRS only received $22.3 million. That’s because the scheme has cost the US government $66.5 million, between startup costs and commission fees of up to 25%. To reach the Congressional Joint Committee on Taxation’s target of $2.4 billion in total additional revenue by 2025, annual collections need to rise to around 15 times what’s been collected so far, for the next seven years.

The odds are against the hired collectors. After three years, a debt is considered statistically uncollectible—and the accounts the IRS assigned to the private collectors were an average of 3.97 years old, TIGTA reports.

Congress, which forced the scheme upon the IRS, doesn’t seem to have learned much from past failures with private debt collectors. A 1996 pilot program resulted in a net loss of $17 million and was canceled after a year. Another attempt in 2006 led to a net loss of almost $30 million. The most recent available IRS data says the agency is owed more than $131 billion in delinquent payments on 14 million accounts.

Many, though not all, of the accounts the IRS has assigned to private debt collectors involve America’s most vulnerable taxpayers: poor people, and survivors of natural disasters. ...

Tax experts say it would be safer and more efficient to direct the entire program budget to the IRS itself. Unlike private collectors, the agency has to abide by stringent checks on taxpayer financial well-being, and it has consistently driven an excellent return on its budget.

“The IRS wouldn’t be hiring collection personnel using scraps salvaged from private profiteering businesses if Congress would do its job and properly fund our most essential government functions, including that of tax collection,” said Mandi Matlock, a tax attorney who does work for the National Consumer Law Center. “Congress created this problem so its friends in private industry could come along and fix it, at a high price to taxpayers.”

November 27, 2018 in IRS News, Tax | Permalink | Comments (1)

The Disappointing Impact Of Encouraging Students To Study More, The Disappointing Impact of Encouraging Students to Study More:

Time studying is strongly correlated with grades earned, but the amount of time that students spend studying has declined dramatically. This column describes an intervention at three higher education campuses that offered coaching and help for students to plan their time. Students were highly engaged, but there was no effect at all on their grades. This is consistent with previous results that suggest this type of intervention does not change student behaviour in a sustained and meaningful way.

November 27, 2018 in Legal Education | Permalink | Comments (2)

Anomalies In The Transition To Territoriality Under The TCJA

Libin Zhang (Roberts & Holland, New York) & Joshua Rabinovits (Roberts & Holland, New York), The End of Eternity: Anomalies in Transition to Territoriality, 159 Tax Notes 621 (2018):

The law formerly known as the Tax Cuts and Jobs Act of 2017 imposed a U.S. tax on the undistributed foreign earnings of certain foreign corporations. This tax on deemed repatriation income, under new section 965 of the Code, has some broad and surprising effects, particularly for individual shareholders of foreign corporations.

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November 27, 2018 in Scholarship, Tax | Permalink | Comments (0)

Monday, November 26, 2018

The Tax Lawyer Publishes New Issue

The Tax Lawyer (2013)The Tax Lawyer has published Vol. 71, No. 4 (Summer 2018):

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November 26, 2018 in ABA Tax Section, Scholarship, Tax | Permalink | Comments (0)

Evelyn Brody: Tax Prof Artist

Sam Brunson (Loyola-Chicago) has a great post describing Suspended Animation an exhibition of  pastels by Tax Prof Evelyn Brody (Chicago-Kent) at the Leslie Wolfe Gallery.  You can check out her pastels and drawings on her website, including a description of her work.

Brody 2

November 26, 2018 in Legal Education, Tax | Permalink | Comments (0)

In Big Law Firm First, O’Melveny To Use Neuroscience And AI To Recruit Associates Hiring Based On Cognitive And Emotional Traits Rather Than Pedigree

O'MelvenyBloomberg Law, O’Melveny Could Set Trend With Law Student Cognitive Testing:

O’Melveny & Myers will ask law students interested in joining the firm to play computer games designed to test their cognitive skills while rooting out hiring biases, an approach that may signal a new industry recruitment trend.

Starting in January, first-year law students can opt to play the series of 12 games, which take about 30 minutes to complete in total, to boost their applications for a job at the firm. The software behind the games makes use of artificial intelligence and a customized algorithm to analyze talent in a highly competitive market for the best and brightest candidates.

These cognitive assessment tools are common in corporate hiring, but law firms often rely on more traditional methods. Cognitive skills tests like O’Melveny’s, which appears to be the first of its kind used in Big Law, aim to eliminate bias and encourage candidate diversity, but are also known to have limitations.  ...

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November 26, 2018 in Legal Education | Permalink | Comments (1)

Oxford Seeks To Hire A Tax Prof

Oxford (2016)The Professorship of Taxation Law provides an excellent opportunity for an enthusiastic candidate with outstanding intellectual leadership skills to consolidate and enhance Oxford's reputation as a centre for excellence in research and teaching in tax law. As well as offering tax courses as part of its undergraduate and postgraduate degrees, Oxford is home to the part-time MSc in Taxation, launched in 2016, which is taught jointly with colleagues at the Centre for Business Taxation in the Said Business School, so this is a particularly exciting time to join the tax community in the university.

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November 26, 2018 in Legal Education, Tax, Tax Prof Jobs | Permalink | Comments (0)

Lesson From The Tax Court: NOD Reprints Are Not Copies, But May Still Trigger Presumption Of Correctness

Tax Court (2017)One of the challenges of administering the tax laws to hundreds of millions of taxpayers is recordkeeping.  Since the 1960’s the IRS has increasingly met this challenge by computerizing its systems of records. As a consequence, it often no longer keeps paper copies of important documents but instead relies on accurate recordation of those documents in its computerized system of accounts.  For example, when the IRS sends out a Notice of Deficiency (NOD), an IRS employee inputs data to reflect the content of the NOD and inputs to reflect the issuance of the NOD.  If a taxpayer (or representative) later wants to see what was in that particular NOD, the IRS can re-print the content of that NOD but does so on a new form.  That’s not a copy.  It’s a reprint.

The difference between a copy and a reprint was an important to last week’s case of Jeffrey D. Gregory v. Commissioner, T.C. Memo 2018-192 (Nov. 20, 2018).  There, Mr. Gregory contested the Office of Appeals’ CDP determination that the IRS had taken the proper administrative steps to assess his 2009 tax liability.  In particular, Mr. Gregory argued that because the IRS was unable to produce an actual copy of the actual NOD it actually sent him, the Office of Appeals could not credibly verify that the IRS had properly sent the NOD.  The IRS argued that its computer records created all the evidence necessary for the Court to apply a strong presumption of correctness that the NOD existed and had been properly mailed.

Judge Halpern’s careful and thorough opinion is well worth your time, but in case you have too much holiday shopping yet to do, today’s blog will give you the short of it.  The takeaway lesson  here is that the IRS does not have to have an actual copy of an NOD to show it complied with administrative requirements, so long as it has sufficient other evidence to trigger a strong  presumption of correctness the courts give to IRS records.

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November 26, 2018 in Bryan Camp, New Cases, Scholarship, Tax Practice And Procedure | Permalink | Comments (4)

ABA Legal Ed Council Sends 75% Within 2 Years Bar Passage Accreditation Standard Back To House of Delegates

ABA Logo (2016)ABA Journal, ABA Legal Ed Council Sends Bar-Passage Standard Back to House of Delegates:

Paperwork for the ABA’s House of Delegates to again consider a proposed revision of the bar passage standard for law school accreditation has been submitted, said Barry Currier, director of accreditation and legal education, on Friday at a council meeting for the Section of Legal Education and Admissions to the Bar.

The council would like the delegates to reconsider the proposed revision at the January 2019 Midyear Meeting. Rejected by the House in 2017, the proposal calls for a bar passage rate of at least 75 percent within two years. Language for the proposed revision remains unchanged, Currier said.

There are various ways to meet the standard’s current requirements, and it’s been reported that no law school has ever been out of compliance with it. ...

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November 26, 2018 in Legal Education | Permalink | Comments (1)

June 3, 2019 Trial Date Set For Suspects In 2014 Dan Markel Murder

Magnauba GarciaTallahassee Democrat, Summer Trial Set for Dan Markel Murder Suspects:

The two suspects accused of plotting and executing the murder of Florida State law professor Dan Markel will face a jury next summer.

A June 3 trial date was set for Sigfredo Garcia and Katherine Magbanua on Tuesday, nearly five years after Markel was gunned down in his Trescott Drive garage in what investigators say was a murder for hire plot.

Garcia and his girlfriend Magbanua face charges of first-degree murder, conspiracy to commit murder and solicitation of murder. They have both pleaded not guilty to all charges. ...

Their motive was a $100,000 payout by the family of Markel’s ex-wife, Wendi Adelson, following the couple’s contentious divorce, Tallahassee Police say.

Investigators say Adelson’s mother and brother — Donna and Charlie Adelson — paid to have Markel killed because of the family’s desire to have the couple’s two young sons move to South Florida after the split.

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November 26, 2018 in Legal Education | Permalink | Comments (0)

TaxProf Blog Holiday Weekend Roundup

Sunday, November 25, 2018

Fifty Ways To Promote Law School Teaching And Learning

Gerald Hess (Gonzaga), Michael Hunter Schwartz (Dean, McGeorge) & Nancy Levit (UMKC), Fifty Ways to Promote Teaching and Learning, 67 J. Legal Educ. ___ (2018):

In 1999, the Journal of Legal Education published an important article for law schools seeking to improve the quality and quantity of faculty scholarly output, James Lindgren’s Fifty Ways to Promote Scholarship, 49 J. Legal Educ. 126 (1999). ... Professor Lindgren detailed numerous ideas for improving scholarship and the intellectual life of a law school. ...

This article addresses the other side of the coin, teaching. Most law schools make claims about the high-quality instruction students will receive. And we believe that all law school faculties and nearly all individual law professors aspire to excellence in the classroom. This article focuses on the efforts law schools and professors can make to fulfill that aspiration.

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November 25, 2018 in Legal Education, Scholarship, Teaching | Permalink | Comments (0)

Stop The Tax On Houses Of Worship

Wall Street Journal op-ed:  Stop the Tax on Houses of Worship, by Russell Moore  (Southern Baptist Convention):

A little-noticed provision in the Tax Cuts and Jobs Act of 2017 now looms over faith communities in America, raising serious questions about religious freedom and the First Amendment. While this provision is a relatively small piece of the overall package, the effect of the policy it created will be felt by the faithful around the country.

This change is a new policy to tax nonprofit organizations—including houses of worship, like the Southern Baptist churches I serve—for the cost of parking and transit benefits provided to employees. This effectively creates an income tax on churches. As Michael Martin of the Evangelical Council for Financial Accountability has noted, that has never happened in U.S. history.

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November 25, 2018 in Tax | Permalink | Comments (0)

Why Is Walter F. George Disappearing From Mercer Law School?

Mercer13WMAZ, Why Is Walter F. George Disappearing From Mercer's Law School?:

Over the summer, the Mercer Law School made a small cosmetic change -- they altered the name of the sign on their front lawn.

That decision has prompted a big discussion on the legacy surrounding its namesake.

Mercer's law school is formally known as the Walter F. George School of Law, named after the prominent senator who held a spot in Washington from 1922-1957.

He was also a segregationist and is the first name signed on the document known as the Southern Manifesto, which opposed Brown vs. Board of Education -- the Supreme Court decision that determined the segregation of public schools was unconstitutional.

The law school's new sign left off his name.

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November 25, 2018 in Legal Education | Permalink | Comments (0)

The Top Five New Tax Papers

SSRN Logo (2018)There 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 new paper debuting on the list at #2:

  1. [191 Downloads]  The Illegality of Digital Services Taxes Under EU Law: Size Matters, by Ruth Mason (Virginia) & Leopoldo Parada (Turin)
  2. [181 Downloads]  Tax Competition and the Ethics of Burden Sharing, by Ivan Ozai (McGill)
  3. [155 Downloads]  Double Non-Taxation and the Use of Hybrid Entities: An Alternative Approach in the New Era of BEPS, by Leopoldo Parada (Turin)
  4. [148 Downloads]  The Mandatory Repatriation Tax Is Unconstitutional, by Sean McElroy (Stanford)
  5. [145 Downloads]   Profit Shifting Before and After the Tax Cuts and Jobs Act, by Kimberly Clausing (Reed)

November 25, 2018 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

Saturday, November 24, 2018

This Week's Ten Most Popular TaxProf Blog Posts

Federal District Court Allows Former Male John Marshall Law School Employee's Gender Discrimination Claim To Proceed

John MarshallABA Journal, Former Male Chicago Law School Employee Alleges Gender Discrimination:

A former employee at the John Marshall Law School in Chicago has won the right to continue his federal complaint of gender discrimination against the school, although claims of age discrimination and retaliation were dismissed.

John Bergholz, 59, was the law school’s executive director of development and alumni relations from 2015 to 2017. His complaint, filed in the U.S. District Court for the Northern District of Illinois in December 2017, claimed individuals attempted to orchestrate a Title IX complaint against him after he met for lunch with a donor at the Trump International Hotel in Washington, D.C. ...

November 24, 2018 in Legal Education | Permalink | Comments (0)

Another IRS Free Speech Scandal

IRS Logo 2Wall Street Journal op-ed:  Another IRS Free-Speech Scandal, by David B. Rivkin (Baker & Hostetler, Washington, D.C.) & Randal John Meyer (Cato Institute Center for Constitutional Studies):

The Internal Revenue Service infamously targeted dissenters during President Obama’s re-election campaign. Now the IRS is at it again. Earlier this year it issued a rule suppressing huge swaths of First Amendment protected speech. The regulation appears designed to hamper the marijuana industry, which is still illegal under federal law although many states have enacted decriminalization measures. But it goes far beyond that.

The innocuously named Revenue Procedure 2018-5 contains a well-hidden provision enabling the Service to withhold tax-exempt status from organizations seeking to improve “business conditions . . . relating to an activity involving controlled substances (within the meaning of Schedule I and II of the Controlled Substances Act) which is prohibited by federal law.” That means that to obtain tax-exempt status under any provision of the Internal Revenue Code’s Section 501—whether as a charity, social-welfare advocacy group or other type of nonprofit—an organization may not advocate for altering the legal regime applicable to any Schedule I or II substance.

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November 24, 2018 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

NY Times: Conservative Heritage Foundation Revives Training Academy For Judicial Law Clerks

HeritageFollowing up on my previous posts:

New York Times, Conservative Heritage Foundation Revives Training Academy for Judicial Clerks, by Adam Liptak:

The Heritage Foundation, a conservative group that has played a leading role in moving the courts to the right, is reviving a “federal judicial clerkship academy,” according to materials posted on Wednesday on the group’s website.

The foundation canceled an earlier version of the program last month after an article in The New York Times raised questions about some of its features, including requirements that participants keep teaching materials secret and promise not to use what they learned “for any purpose contrary to the mission or interest of the Heritage Foundation.”

John Malcolm, a Heritage Foundation official, said the revised program eliminated those requirements, which he said had been the subject of widespread and warranted criticism. “We led with our chin, and we got hit,” he said. “It was a self-inflicted wound.”

“The language that was in the original application was totally unnecessary and was just a misguided attempt to protect the reputations of the people who were involved,” Mr. Malcolm said. “But it was silly, and we shouldn’t have done it. It was never our intention to have some kind of loyalty oath. People do not have to be loyal to the Heritage Foundation.” ...

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November 24, 2018 in Legal Education | Permalink | Comments (3)

Friday, November 23, 2018

Weekly SSRN Tax Article Review And Roundup: Elkins Reviews The Global Battle to Capture MNE Profits By Bankman, Kane & Sykes

This week, David Elkins (Netanya) reviews a new paper by Joseph Bankman (Stanford), Mitchell Kane (NYU) & Alan Sykes (Stanford), Collecting the Rent: The Global Battle to Capture MNE Profits, 72 Tax L. Rev. __ (2019): 

Elkins (2018)This article focuses on the concept of economic rent within the context of the taxation and regulation of multinational enterprises (MNEs). Rent is the income above and beyond what is necessary in order to induce an individual or firm to engage in any particular economic activity. For marginal producers, the rent will be zero. Infra-marginal producers will recognize varying degrees of rent. One consequence of the concept of economic rent is that a tax or regulatory scheme that extracts some or even all of that rent will not likely affect a firm’s behavior. In contrast, a tax or regulatory scheme that extracts more than rent will likely induce a change in behavior.

In describing rent, the authors distinguish between true economic rent and quasi-rent. Assume that there is a firm that has already incurred a large economic outlay in order to establish a production line, develop intellectual property and so forth. The difference between its income and its current costs is quasi-rent. However, to determine its true economic rent, we would also need to factor in its initial economic outlay. The difference is significant because a tax or regulatory scheme that extracts quasi-rents may not change the firm’s immediate behavior, but will affect future investment. Therefore, taxing quasi-rents is not sustainable on a long-time basis.


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November 23, 2018 in David Elkins, Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)

Weekly Legal Education Roundup