TaxProf Blog

Harvard Law Students Launch Campaign To #DumpKirkland Over Mandatory Arbitration Agreements For Associates

Bloomberg Law, Law Students Plan to #DumpKirkland Over Arbitration Agreements:

Students at Harvard Law School have launched a campaign urging their peers to boycott Kirkland & Ellis until the firm removes mandatory arbitration agreements from its employee contracts.

On Monday morning, a student-led organization called the Pipeline Parity Project published a copy of a 2018 Kirkland arbitration agreement. In it, associates waived their right to sue the firm in court over a range of employment concerns, including sexual harassment and wage theft.

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NY Times: Trump’s Tax Cut Was Supposed To Change Corporate Behavior. Here’s What Happened.

New York Times, Trump’s Tax Cut Was Supposed to Change Corporate Behavior. Here’s What Happened.:

Nearly a year after the tax cut, economic growth has accelerated. Wage growth has not. Companies are buying back stock and business investment is a mixed bag.

The $1.5 trillion tax overhaul that President Trump signed into law late last year has already given the American economy a jolt, at least temporarily. It has fattened the paychecks of most American workers, padded the profits of large corporations and sped economic growth.

Those results weren’t a surprise. Economists across the ideological spectrum predicted the new law would fuel consumer spending, in classic fashion: When the government borrows money and dumps it into the economy, growth tends to accelerate. But Republicans did not sell the law as a sugar-high stimulus. They sold it as a refashioning of the incentives in the American economy — one that would unleash more investment, better efficiency and higher wages, along with enough growth to offset any revenue lost to the government from lower tax rates.

Ten months after the law took effect, that promised “supply-side” bump is harder to find than the sugar-high stimulus. It’s still early, but here’s what the numbers tell us so far:

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'Big Law Killed My Husband': An Open Letter From A Sidley Partner's Widow

American Lawyer, 'Big Law Killed My Husband': An Open Letter From a Sidley Partner's Widow:

Joanna Litt’s husband, Gabe MacConaill, a 42-year-old partner at Sidley Austin, committed suicide in the parking garage of the firm’s downtown Los Angeles office last month.

My husband took his life—our life—on Sunday, Oct. 14, one month to the day before our 10-year wedding anniversary. We had been planning a trip for over a year in anticipation of celebrating.

I’m beyond lost and I don’t know how I’m going to get through the rest of my life. Gabe was my best friend, my partner, my lover, and my constant. I turned to him for everything, and he was always there with the most perfect advice and words. He was my world, and after losing him, I can absolutely say, my better half. Gabe and I did not have children (except for our dog Ivy) and we made that deliberate choice so we could focus solely on our life together, because we were happy. And now he’s gone. He saw no other choice or path.

I never thought in a million years that he could or would do that. And I keep going back to one thought: “Big Law” killed my husband. ...

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Ordower: Abandoning Realization And The TCJA Transition Tax

Henry Ordower (Saint Louis), Abandoning Realization and the Transition Tax: Toward a Comprehensive Tax Base:

The Tax Cuts and Jobs Act of 2017 imposed a tax, the “transition tax,” on as much as 31 years of undistributed, accumulated corporate income. This article focus on that transition tax as it evaluates the function and constitutionality of the tax and considers whether the transition tax might serve as a model for addressing the broader problem of deferred income in the United States. The article views the transition tax as joining the expatriation tax and other mark to market inclusion provisions in abandoning any pretext that there is continued vitality in the realization principle as something more compelling than any other longstanding and obsolescing tax principle. Recommending that Congress seize the Tax Cuts and Jobs Act moment and discard the general rule deferring the inclusion of gain in income through a realization requirement in favor of the annual marking to market of all the taxpayer’s property, the article models a general mark to market transition tax after the new transition tax on deferred foreign income.

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Tenured Emory Law Prof Suspended After Allegedly Again Using N-Bomb

Following up on my previous posts (links below):  Emory Wheel, Law Professor on Leave After Allegedly Repeating Racial Slur:

Emory Law Professor Paul J. Zwier II, who was briefly suspended from teaching after he said the N-word in class in August, has been placed on paid administrative leave after the University received multiple reports that he recently repeated the same racial slur, according to School of Law Interim Dean James B. Hughes Jr.

Hughes announced Zwier’s leave on Monday following a Friday statement that he was investigating allegations against the tenured professor.

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Borden: S-Corporation Cash-Out Break-Ups And § 1031 Exchanges

Bradley T. Borden (Brooklyn), S-Corporation Cash-Out Break-Ups and Code Sec. 1031 Exchanges, 21 J. Passthrough Entities 21 (2018):

Many legacy S-Corporations (those with real property purchased before the advent of LLCs) still own real property with the prospect of selling or transferring it as part of a generational change in ownership. With such dispositions, the owners may have different objectives for the use of the property’s sale proceeds and may wish to part ways. Many tax advisors are familiar with techniques that apply to similar types of break-ups of partnerships and LLCs, which allow some parties to exchange property tax free under Code Sec. 1031 while others cash out. S-Corporation break-ups are taxed differently from partnership and LLC break-ups, so the same types of transactions that are tax-free in the partnership or LLC context could trigger gain recognition for members of S-Corporations.

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Marron Presents Designing A Carbon Tax Dividend Today At Loyola-L.A.

Donald Marron (Urban Institute) presents Designing a Carbon Tax Dividend at Loyola-L.A. today as part of its Tax Policy Colloquium Series hosted by Ellen Aprill and Katie Pratt: 

A robust carbon tax would generate considerable revenue. Some carbon tax advocates have suggested returning those revenues to Americans through direct payments, often called carbon dividends. We examine how to design these dividends considering two, sometimes conflicting principles. Carbon dividends can be viewed as shared income from a communal property right, much as Alaskans share in income from the state’s oil resources. Dividends can also be viewed as rebating the carbon tax back to consumers. These views often have different implications for designing carbon dividends.

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Michigan State Dean: Making Law School Part Of University 'Will Stabilize Us'

Following up on my previous post, Michigan State Law School To Fully Integrate With University: Lansing State Journal, Dean: Making MSU College of Law Part of the University 'Will Stabilize Us':

By 2020, the Michigan State University College of Law will no longer be a private law school located in the heart of the East Lansing campus. It will be a part of the university.

"Everybody recognized that sooner or later this was going to happen," said Lawrence Ponoroff, dean of the law school. ...

[T]he move comes after several difficult years. Like many other schools, the MSU College of Law has seen declines in applications and enrollment.

Its expenses outran revenue to the tune of $1.74 million between July 1, 2016 and June 30, 2017, according to the school's 2016 990 tax form, the most recent available.

“This action will stabilize us," Ponoroff told the law school's Board of Trustees on Oct. 31, "but it’s not a panacea, and we will still all need to continue to work very hard to bring the law school to the next plateau, the levels that we’d like to see it achieve.”

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NY Times: Booming Economy, Tax Cuts Did Not Save Republicans In Midterms

New York Times, The Economy Didn’t Save Republicans After All:

Neither strong growth nor a $1.5 trillion tax cut helped President Trump’s party in the midterm elections — by any number of measures.

Unemployment is abnormally low. Growth has sped up. A $1.5 trillion tax cut, signed by President Trump last year, is fueling consumer spending. Faced with strong Democratic enthusiasm and fund-raising, and hindered by an unpopular president, Republicans were counting on that economic strength to lift them at the polls, or at least limit the damage.

It didn’t. Republicans lost in House districts with low unemployment rates. They lost in districts that have gained manufacturing jobs. They lost in districts that got big tax cuts. And they lost overwhelmingly in the kind of affluent, educated suburbs that have experienced the strongest overall recovery — and that were once among the most reliable Republican districts.

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UC-Berkeley Law School Confronts Racist Legacy Behind Boalt Hall

Following up on my previous posts (links below):  Los Angeles Times, UC Berkeley Law School Confronts the Racist Legacy Behind its Famed Boalt Hall:

For more than a century, UC Berkeley's elite law school has been closely tied to the name of the building that houses it, Boalt Hall.

Law school alumni have affectionately referred to themselves as “Boalties.” The Boalt name has been attached to more than 120 organizations, public forums and positions related to the law school — including its alumni and student groups, endowed chairs, school directory and Facebook page. Over time, in the California legal community, many people simply came to call the law school Boalt Hall.

But the revelation that John Henry Boalt, a 19th-century San Francisco attorney, was virulently anti-Chinese has rocked the school and plunged it into the national debate over what to do when honored historical figures turn out to have unsavory pasts. The Berkeley controversy comes as other schools, such as Stanford, the University of San Francisco and Cal State Long Beach, are reexamining California’s past and changing building names or dropping mascots associated with those who kept slaves or mistreated Native Americans and Asian Americans.

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Lesson From The Tax Court: The Hotel California Rule

I love classic rock from the 70’s. Not just for all the great music, but for the way that the bands help me teach tax. For example, Fleetwood Mac teaches a lesson about §162 deductions for uniforms. I know, I know, you would think that lesson would come from the Village People, but it was Stevie Nicks who filed a petition in Tax Court after the IRS disallowed her deduction for stage clothing.

The Eagles’ classic “Hotel California” provides an excellent way to think about Tax Court procedure, as we can learn from the recent case of Daniel Sadek v. Commissioner, T.C. Memo. 2018-174 (Oct. 16, 2018).  In that case, the Tax Court dismissed as untimely Mr. Sadek’s 2017 petition contesting a 2011 NOD that the IRS had sent Mr. Sadek. The NOD was for $25 million and Mr. Sadek has not yet had a day in court to contest that amount. Oh, sure, he can sue for a refund but only if he fully pays the deficiency.  Flora v. United States, 362 U.S. 145 (1960). He could also file bankruptcy and ask the bankruptcy court to determine his tax liability under its powers in 11 U.S.C. §505. But Mr. Sadek’s best hope might come in a CDP hearing. That is what I want to explore in this post.

I think this case teaches a lesson about the relationship between the Tax Court’s deficiency jurisdiction and its CDP jurisdiction. The question is whether Mr. Sadek, who has now lost in Tax Court, will be able to contest the merits of the $25 million in a CDP hearing.  To answer that question, we need to understand the Hotel California rule and how it affects a taxpayer’s ability to turn what is ostensibly a hearing about collection into a hearing about tax liability.

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Non-Elite Universities Launch Medical, Not Law, Schools In Search Of Future Financial Stability

Inside Higher Ed, Medium Sized Institutions Look To Medical Schools For Future Financial Stability:

As its fellow midsize, modestly endowed private colleges look nervously to the future, Marist College in New York’s Hudson Valley is making a bold, nearly $180 million bet: last month, it announced that it will partner with a regional health-care provider to build a new medical school.

Marist Health Quest School of Medicine is expected to open its doors in 2022, reaching capacity in 2032 with about 500 students.

Adding a medical school to a private college is “honestly a big leap up in scope and complexity,” said [former Loyola-Chicago Law School Dean and Marist College] President David Yellen. But it makes sense, he said. “If you have the resources, there’s room for another good medical school. And we think it will boost our status and reputation.”

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Paulson Eyes Tax-Free Puerto Rico Residency Once Kids Head To College

Bloomberg, Paulson Eyes Puerto Rico Residency Once Kids Head to College:

Maybe it takes an empty nest to fill up a tax haven.

Billionaire hedge-fund manager John Paulson is considering becoming a resident of Puerto Rico in the next few years once his children head off to college.

Paulson, who gained fame from his bets against the U.S. housing market about a decade ago, may move to the bankrupt island after his children, who are 13 and 16, finish their high-school education, he said.

“It’s difficult to move with them,” Paulson said about his children at a Beryl Elites conference in midtown Manhattan Monday evening. “But once, I think, our children go to college, I think it’s likely that we’ll establish residence in Puerto Rico.”

Paulson owns several hotels and office space on the island. He’s contemplated moving to Puerto Rico in recent years to take advantage of the commonwealth’s tax advantages. New residents are exempt from the federal income tax and Puerto Rico taxes on passive income. The beautiful beaches, sunshine and great restaurants are also a motivating factor, Paulson said.

“It’s the only place a U.S. citizen can go and literally avoid, legally, all their taxes,” Paulson said.

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TaxProf Blog Weekend Roundup

Saturday:

• Fires Cause Massive Destruction In Malibu, But Pepperdine Is Safe
• This Week's Ten Most Popular TaxProf Blog Posts
• The Contextual Problem Of Law Schools
• Universal Basic Incomes v. Targeted Transfers: Anti-Poverty Programs In Developing Countries

Sunday:

• Michigan Hosts 13th Annual Empirical Legal Studies Conference
• University of Illinois Law School Releases Additional Documents Related To Allegations Of Professor's Sexual Misconduct
• Florida Hosts 14th Annual International Tax Symposium
• The Top Five New Tax Papers

Michigan Hosts 13th Annual Empirical Legal Studies Conference

Tax papers at the 13th Annual Empirical Legal Studies Conference at Michigan:

• Kathryn Lim (U.S. Treasury Department), Alicia Miller (IRS), Max Risch (Michigan) & Eleanor Wilking (NYU), Independent Contractor or Employee? The Changing Relationship between Firms and Their Workforce and Potential Consequences for the U.S. Income Tax

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University of Illinois Law School Releases Additional Documents Related To Allegations Of Professor's Sexual Misconduct

Following up on my previous posts:

• University Of Illinois Law School Dean, Faculty Speak Out Against Colleague's Sexual Misconduct (Oct. 24, 2018)
• Continuing Fallout From Sexual Misconduct By University Of Illinois Law Professor (Oct. 25, 2018)

The University of Illinois Law School has released two additional documents relating to the sexual harassment claims involving Professor Jay Kesan:

• Letter from Dean Vikram Amar to Law School Community (Nov. 8, 2018)
• Letter from Dean Heidi Hurd to Professor Jay Kesan (Dec. 6, 2002)

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Florida Hosts 14th Annual International Tax Symposium

The University of Florida Graduate Tax Program hosted its Fourteenth International Taxation Symposium on Friday:

• Andrés Báez (Universidad Carlos III, Madrid) & Yariv Brauner (Florida), Taxing the Digital Economy.... Seriously, 46 Intertax 462 (2018)
• Patricia A. Brown (Miami), Can Anyone be Trusted to Enforce National Treatment Disciplines with Respect to Tax Matters?

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The Top Five New Tax Papers

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

1. [249 Downloads]  The International Provisions of the TCJA: Six Results after Six Months, by Reuven Avi-Yonah (Michigan)
2. [156 Downloads]  Tax Competition and the Ethics of Burden Sharing, by Ivan Ozai (McGill)
3. [133 Downloads]  The Mandatory Repatriation Tax Is Unconstitutional, by Sean McElroy (Stanford)
4. [130 Downloads]  Double Non-Taxation and the Use of Hybrid Entities: An Alternative Approach in the New Era of BEPS, by Leopoldo Parada (University of Turin)
5. [124 Downloads]  The Proposed SALT Regulations May Be Doomed, by Andy Grewal (Iowa)

Fires Cause Massive Destruction In Malibu, But Pepperdine Is Safe

Malibu awakens to massive devastation this morning. As the map below shows, the fires came within feet of Pepperdine (the blue oval on the map) on three sides, but not a single permanent structure on campus was lost thanks to the heroic efforts of firefighters on the ground and in the air. In every talk I give, I say I am the luckiest law school dean in America to have the privilege of serving with the most amazing collection of people I have ever been associated with. Our hearts are broken by the loss around us.

Firefighters stopped the fire just a few feet from our home (at the northwestern most point of campus):

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This Week's Ten Most Popular TaxProf Blog Posts

1. Fires Cause Massive Destruction In Malibu, But Pepperdine Is Safe
2. Jeff Kahn (Florida State), GoTaxMe: Crowdfunding And Gifts (Why Peter Strzok Should Be Taxed On The $450k He Raised On GoFundMe)
3. Northwestern Law Dean Cites School's 'Difficult Time' As Reason For Faculty Cuts
4. Taxation, Inequality, And Life: A BYU Interview With Ed Kleinbard (USC)
5. The Number Of 1Ls By State (2017 v. 2010)
6. NY Times: Happy ‘National Jealousy Day’! Finland Bares Its Citizens’ Taxes
7. The Economics Of Law School: Employment Prospects And Market Inefficiencies
8. Tax Court: Foreign Lawyer Cannot Deduct Cost Of NYU LL.M. Because It Qualified Him To Sit For The New York Bar
9. Law School Dean Buys 'Conference Bike' To Increase Collaboration, Fitness
10. NY Times: Tax Prep Companies Use FOIA Requests To Thwart Dennis Ventry's Criticism Of Free File Program

The Contextual Problem Of Law Schools

Eli Wald (Denver), The Contextual Problem of Law Schools, 32 Notre Dame J.L. Ethics & Pub. Pol'y 281 (2018):

Law schools have a contextual problem. They teach law universally, ignoring context. Through a traditional curriculum that has changed relatively little in over a century, law schools advance a universal approach to professionalism and professional identity preparing law students to enter a homogenous legal profession in which lawyers practice law performing similar tasks in similar practice settings representing similar clients. Except that unlike legal education, the practice of law has grown immensely complex and diverse over time. Far from universal, law practice and lawyers have become richly contextual. Context now matters in the practice of law: client identity, lawyer identity, tasks, subject matters and status inform and shape what lawyers do and their exercise of professional judgment. Law schools’ disregard of context thus constitutes a significant problem as it misleads students and fails to adequately prepare them for the practice of law.

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Universal Basic Incomes v. Targeted Transfers: Anti-Poverty Programs In Developing Countries

Rema Hanna (Harvard) & Benjamin A. Olken (MIT), Universal Basic Incomes versus Targeted Transfers: Anti-Poverty Programs in Developing Countries, 32 J. Econ. Perspectives 73 (Fall 2018):

Of the 17 Sustainable Development Goals articulated by the United Nations, number one is the elimination of extreme poverty by 2030. While future economic growth should continue to reduce poverty, it will not solve the problem by itself; thus, there is a potentially important role for national-level transfer programs that assist poor families in developing countries. Such programs are often run by developing country governments. Many countries have implemented transfer programs that seek to target beneficiaries: that is, to identify who is poor and then to restrict transfers to those individuals. Some people have begun to advocate for "universal basic income" programs, which dispense with trying to identify the poor and instead provide transfers to everyone. We begin by considering the universal basic income as part of the solution to an optimal income-taxation problem, focusing on the case of developing countries, where there is limited income data and inclusion in the formal tax system is low. We examine how the targeting of transfer programs is conducted in these settings, and provide empirical evidence on the tradeoffs involved between universal basic income and targeted transfer schemes using data from Indonesia and Peru—two countries that run nationwide transfer programs that are targeted to the poor.

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Malibu Burning

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Weekly SSRN Tax Article Review And Roundup: Holderness Reviews Kahn's GoTaxMe — Crowdfunding And Gifts

This week, Hayes Holderness (Richmond) reviews Jeffrey H. Kahn (Florida State), GoTaxMe: Crowdfunding and Gifts, 22 Fla. Tax Rev. ___ (2019).

What is a “gift”? Webster’s Dictionary defines “gift” as “something voluntarily transferred by one person to another without compensation” (I kid, I kid). In GoTaxMe: Crowdfunding and Gifts, Professor Jeffrey Kahn challenges the reader to define “gift” for federal income tax purposes in a more robust fashion than simply as transfers made with detached and disinterested generosity. Anyone who has taken a basic federal income tax class knows that § 102 excludes gifts from gross income but fails to define what gifts are. The Supreme Court filled this gap with the Duberstein “detached and disinterested generosity” standard, noting that in determining whether any particular transfer is a gift, “the most critical consideration . . . is the transferor’s ‘intention.’” Professor Kahn uses the example of the (currently) $448,162 donated by 11,709 people to former FBI agent Peter Strzok through the crowdfunding site GoFundMe.com to argue that the Duberstein standard’s focus on the transferor’s intention fails at the edges.

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Weekly Legal Education Roundup

• Above the Law, Elite Law School To Cut Faculty Due To Its ‘Challenging Financial Position’
• Erwin Chemerinsky (Dean, UC-Berkeley), Reflections of the Future of Legal Education
• Barry Currier (Managing Director, ABA Section on Legal Education and Admissions to the Bar), A Legal Education Report Card
• Samuel P. Engel, The Economics of Law School: Employment Prospects and Market Inefficiencies

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Tax Policy In The Trump Administration

• Bloomberg, The Democrats’ Options for Repealing the Trump Tax Cut
• Bloomberg, Trump Says He's Open to Raising Taxes to Offset Middle-Class Cut
• Fiscal Times, 3 Ways Democrats Could Roll Back Trump’s Tax Cuts
• Huffington Post, How Republicans Failed To Sell Their Tax Law

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Scholars With Surnames Beginning With Letters Early In The Alphabet Have An Unfair Advantage In Citation Studies

Jeffrey R. Stevens (Nebraska) & Juan F. Duque (Arcadia), Order Matters: Alphabetizing In-Text Citations Biases Citation Rates, Psychonomic Bulletin & Reviews (2018):

Though citations are critical for communicating science and evaluating scholarly success, properties unrelated to the quality of the work—such as cognitive biases—can influence citation decisions. The primacy effect, in particular, is relevant to lists, which for in-text citations could result in citations earlier in the list receiving more attention than those later in the list. Therefore, how citations are ordered could influence which citations receive the most attention. Using a sample of 150,000 articles, we tested whether alphabetizing in-text citations biases readers into citing more often articles with first authors whose surnames begin with letters early in the alphabet.

We found that surnames earlier in the alphabet were cited more often than those later in the alphabet when journals ordered citations alphabetically compared with chronologically or numerically.

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Estreicher & Wallace: Equitable Health Savings Accounts

Samuel Estreicher (NYU) & Clint Wallace (South Carolina), Equitable Health Savings Accounts, 55 Harv. J. on Legis. ___ (2019):

This Article offers the first comprehensive legal critique of existing Health Savings Accounts (HSAs), arguing that current policy is redistributively regressive, thus exacerbating inequality, and also fails to accomplish stated health care goals. We propose an alternative—Equitable Health Savings Accounts—which uses cash grants as a tool to address both of these problems. The Equitable HSA is a market-based social policy that calibrates size and delivery of a government subsidy to help the least well-off and to facilitate development of and participation in healthcare markets. Equitable HSAs can serve as a model for using cash grants to bridge the gap between Republican social policy proposals that generally carry a market libertarian flavor, and Democratic proposals that are focused on redistribution and social safety nets. Contrary to conventional political wisdom and academic commentary on the tradeoff between equity and efficiency, we make the case that in healthcare delivery, these goals need not be mutually exclusive.

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Mid-Term Exams, One-Handed Catches, And Deliberate Practice

TaxProf Blog op-ed:  Mid-Term Exams, One-Handed Catches, and Deliberate Practice, by Ray Brescia (Albany):

Wide receiver Odell Beckham, Jr., of the New York Giants has already passed into football legend and even popular culture for his ability to make remarkable, one-handed catches.  For some this might suggest that “OBJ,” as he is often called, has innate talent, which he certainly does.  But a little digging on the internet shows that he actually practices these catches, again and again and again, outside of games.  He may be supremely talented, but he also works at perfecting his craft.

Recently, in an excellent post on Best Practices For Legal Education, Carrie Sperling discussed some of the benefits of offering mid-term assessments in her law school classes. For her, offering mid-terms, when coupled with a “growth mindset,” helps propel students toward mastery of a given subject.  Sperling identifies at least three reasons for offering mid-term assessments: students learn first, “whether they are using the right strategies,” second, “whether they have put forth enough effort,” and third, the ways “they can change course in order to grow their intelligence before the final exam.”  I have also found these to be true as a result of my own use of mid-terms.

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Cauble: Itemized Deductions In A High Standard Deduction World

Emily Cauble (DePaul), Itemized Deductions in a High Standard Deduction World, 70 Stan. L. Rev. Online 146 (2018):

New tax legislation enacted in December 2017 exacerbates the extent to which various itemized deductions, such as the charitable contribution deduction and the home mortgage interest deduction, disproportionately benefit high income individuals.

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Slain Mobster Whitey Bulger's Career Advice To Students: 'If You Want To Make Crime Pay, Go To Law School'

Independent, Career Mobster James Whitey Bulger's Surprising Advice to Three Schoolgirls:

In the years leading up to his death in jail last week, notorious Boston mob boss James "Whitey" Bulger wrote about his regrets in life.

Bulger, imprisoned for life for his role in 11 murders, wrote a letter to three teenage girls in 2015, telling them he was "a ninth-grade dropout" who "took the wrong road". The former mobster said he was among "society's lower, best forgotten" members. He told the students, who had first written to him for a school history project, not to spend their time on him. "My life was wasted and spent foolishly, brought shame and suffering on my parents and siblings and will end soon," he wrote.

The US Bureau of Prisons confirmed that Bulger (89) died last Tuesday at the jail in Bruceton Mills, West Virginia.

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Shaheen: Income Tax Treaty Aspects Of Nonincome Taxes

Fadi Shaheen (Rutgers), Income Tax Treaty Aspects of Nonincome Taxes: The Importance of Residence, 71 Tax L. Rev. 583 (2018):

This article considers the residence-related income tax treaty aspects of nonincome taxes such as the retail sales tax, the value added tax, the flat tax, the X tax, the destination-based cash flow tax, and certain turnover taxes, and discusses the related treaty aspects of the concepts of tax, tax on income, comprehensive taxation, and nondiscrimination. The focus here is on the underappreciated conceptual and technical importance of tax residence in thinking about and applying tax treaties in the context of nonincome taxes. The article makes two main residence-related points. First, that the question of residence is a critical treaty gateway issue—that is, if the United States were to replace the existing income tax with a noncovered, nonincome tax, the affected U.S. taxpayers would cease to be U.S. residents for treaty purposes and as such would no longer be entitled to claim benefits under existing income tax treaties. This residence problem could become even more consequential if the nonincome tax in question was a tax covered by the treaty. Second, the article emphasizes the residence-relevance criterion for evaluating the identity or substantial similarity of new taxes to existing taxes for determining whether a new tax was covered by a treaty.

Should Professors Teach More At The University Of Wisconsin To Avoid Program Cuts?

Inside Higher Ed, Should Professors Teach More to Avoid Program Cuts?:

Faced with steep budget cuts, several University of Wisconsin System campuses have targeted academic programs to try to save money. The Superior campus announced last year that it was suspending 25 programs, including nine majors — sociology and political science among them. The Stevens Point campus said it would cut 13 majors, including English, history, political science and sociology — and expand programs it says are more job oriented and in demand. In many cases where colleges take this approach, humanities and other liberal arts disciplines face some of the deepest cuts.

The Oshkosh campus is taking a different route to solvency: it’s asking tenured and tenure-track faculty members in the College of Letters and Science to teach more.

“I fully understand the hardship that this change may present to faculty and instructional academic staff,” Colleen McDermott, dean of the college, wrote to faculty members in a recent letter about the change. “We have exhausted every other route of cost cutting for the college (short of laying off faculty or closing programs).”

Currently, tenure-line faculty members in the college teach 24 credit hours per year, or 12 credit hours -- typically four classes -- per semester. But most professors apply for and get what’s known as a curriculum modification to teach 18 credit hours per year, or three classes a semester, to spend more time on research.

Starting next year, however, professors will all teach a minimum of 21 credit hours per year, or four classes one semester and three the other. That’s regardless of where they are in their curriculum-modification schedules, which last three years. ...

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Jensen: Recent Law Review Articles On Taxation And The Constitution

Erik M. Jensen (Case Western), Taxation and the Constitution: Recent Articles, 159 Tax Notes 1155 (May 21, 2018):

This article is the latest installment in a series of reviews of significant articles dealing with taxation and the Constitution. It covers articles that were published or otherwise made generally available in 2017 [2016 articles here].

The Economics Of Law School: Employment Prospects And Market Inefficiencies

Samuel P. Engel, The Economics of Law School: Employment Prospects and Market Inefficiencies, 87 Miss. L.J. 501 (2018):

Using recent data from the American Bar Association and the National Association for Law Placement, as well as proprietary data and modeling, this Article constructs an economic model that indicates that, in many situations, there is remarkably a negative correlation between law school prestige and economic outcome, after controlling for LSAT scores. The Article utilizes six main variables in the construction of the model: (1) cost of tuition; (2) financial aid packages; (3) cost of living; (4) LSAT scores; (5) type of legal employment secured; and (6) the relationship between LSAT score and law school performance. The resulting data provides a detailed breakdown regarding the economic outcomes of attending a specific law school, after adjusting for important factors such as the quality of competition, the cost of living in nearby markets, and the cost of attendance. The Article also briefly discusses the secondary effects and characteristics of this market inefficiency, including its tendency to: (1) resist natural correction by the legal market; (2) accelerate grade inflation; (3) constrain upward mobility, thereby limiting diversity; and (4) reduce the number and quality of law students.

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Grinberg: International Taxation In An Era Of Digital Disruption

Itai Grinberg (Georgetown), International Taxation in an Era of Digital Disruption: Analyzing the Current Debate:

The “taxation of the digital economy” is currently at the top of the global international tax policymaking agenda. A core claim some European governments are advancing is that user data or user participation in the digital economy justifies a gross tax on digital receipts, new profit attribution criteria, or a special formulary apportionment factor in a future formulary regime targeted specifically at the “digital economy.” Just a couple years ago the OECD undertook an evaluation of whether the digital economy can (or should) be “ring-fenced” as part of the BEPS project, and concluded that it neither can be nor should be.

Importantly, concluding that there should be no special rules for the digital economy does not resolve the broader question of whether the international tax system requires reform. The practical reality appears to be that all the largest economies have come to agree either that a) there is something wrong with the taxation of the “digital economy,” or b) there is something more fundamentally wrong with the structure of the current international tax system given globalization and technological trends.

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UC-Berkeley Adopts Diversity, Equity, And Inclusion Action Plan After African-American Composition Of MBA Class Falls From 8.9% To 2.1%

Inside Higher Ed, Berkeley B-School Vows to Do Better on Diversity:

The Haas School of Business at the University of California, Berkeley, is vowing to do a better job of recruiting minority students after enrolling a full-time M.B.A. class that many criticized for having only six black students in a class of 291. That's down from 10 black students who enrolled last year, in a smaller class of 282, and a peak in 2016 of 19 black students in a class of 252. A report issued by the business school [Diversity, Equity, and Inclusion Action Plan] said that it "failed to react quickly" as black enrollment numbers fell. New steps being taken include hiring a director of diversity admissions, adding scholarship dollars and using a "first-offer-best-offer" approach, and changing M.B.A. admissions criteria "to consider an applicant’s skillset and experience in the areas of diversity, equity, and inclusion."

Kahn: GoTaxMe — Crowdfunding And Gifts (Why Peter Strzok Should Be Taxed On The $450k He Raised On GoFundMe)

Jeffrey H. Kahn (Florida State), GoTaxMe: Crowdfunding and Gifts, 22 Fla. Tax Rev. ___ (2019):

In 2018, Peter Strzok was fired from the FBI, based on text messages that he sent degenerating President Trump. A week later, a group set up a GoFundMe page soliciting funds to help with his “legal costs” and to replace his “lost income.” As of early September, that fund had raised over $450,000. GoFundMe states on its website that donations made are usually considered to be “private gifts” and not taxable to the recipient. Using Mr. Strzok’s campaign as an example, this article will discuss the current standards for determining whether a transfer qualifies as a nontaxable gift and the policy rationale for the exclusion of gifts.

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Bakija Presents Would A Bigger Government Hurt The Economy? Today At Pennsylvania

Jon Bakija (Williams College) presents Would a Bigger Government Hurt the Economy?, in How Big Should Our Government Be? (University of California Press 2016) (with Lane Kenworthy (UC-San Diego), Peter Lindert (UC-Davis) & Jeff Madrick (Bernard L. Schwartz Rediscovering Government Initiative, Century Foundation)) at Pennsylvania today as part of its Tax Law and Policy Workshop Series hosted by Michael Knoll, Chris Sanchirico, and Reed Shuldiner:

If the United States is going to meet the rising costs of promised government retirement benefits and health care for the elderly while doing more to promote economic security, equality of opportunity, and shared prosperity, it will eventually need to increase taxes. Is this the best solution, or should we scale back government and cut taxes, thereby improving incentives for productive economic activity? This is the fundamental political dilemma of our times. A thoughtful answer ought to depend on many different considerations, but one of the most critical is the long-run economic costs and benefits of larger government and the taxes that go with it. I begin by briefly reviewing some theory that helps to put the debate into perspective. Then I consider evidence on three key empirical questions:

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Kysar Presents Unravelling The Tax Treaty Today At Michigan

Rebecca Kysar (Fordham) presents Unravelling the Tax Treaty at Michigan today as part of its Tax Policy Workshop Series hosted by Reuven Avi-Yonah:

Coordination among nations over the taxation of international transactions rests on a network of some 2,000 bilateral double tax treaties. The double tax treaty is, in many ways, the roots of the international system of taxation. That system, however, is in upheaval in the face of globalization, technological advances, taxpayer abuse, and shifting political tides. In the academic literature, however, scrutiny of tax treaties is largely confined to the albeit important question of whether tax treaties are beneficial for developing countries. Surprisingly little consideration has been paid to whether developed countries, like the United States, should continue to sign tax treaties with one another, and no formal revenue or economic analyses of the treaties has been undertaken by the United States government. In fact, little evidence or theory exists to support entrance into tax treaties by the United States, and examination of investment flows indicates the treaties likely lose significant U.S. revenues. Additionally, they enable taxpayer abuse, stagnate domestic policy, and thwart reforms of the antiquated international tax system. These consequences are particularly problematic for the United States. Other nations, after all, have been able to supplement their revenues and pursue destination-based taxation through treaty-friendly VATs.

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Crawford Presents Tax Talk And Reproductive Technology Today At Chicago

Bridget J. Crawford (Pace) presents Tax Talk and Reproductive Technology, 98 B.U. L. Rev. ___ (2018), at Chicago as part of its Regulation of Family, Sex, and Gender Workshop Series:

The tax system both reacts to and helps create attitudes about the value of certain behaviors and choices. This Article makes three principal claims — one empirical, one normative, and one interpretative.

The Article demonstrates empirically that a representative sample of fertility clinics in the United States do not make publicly available information about the tax consequences of compensated human egg transfers — commonly called egg “donation.” The United States Tax Court recently decided in a case of first impression, Perez v. Commissioner, that a compensated egg transferor must report as income any amount she receives for her eggs. Although the Tax Court missed an opportunity to clarify further complex questions about the tax consequences of transfers of human bodily materials, the basic holding of Perez was clear.

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The Future Of Training Powerful Legal Communicators

Nicholas W. Allard (Former Dean, Brooklyn) & Heidi K. Brown (Brooklyn), The Future of Training Powerful Legal Communicators, NYSBA J., Sept. 2018, p. 10:

Twenty years ago, lawyers communicated through lengthy client opinion letters or settlement demand letters transmitted via fax or FedEx, briefs filed with the court (often hand-delivered by couriers), and perhaps the occasional press release carefully crafted for high profile cases. Today, in our fast-paced, media-saturated, and tech-driven world, we see lawyers like Michael Avenatti advocating for his clients through Twitter soundbites. Pleadings and briefs – once buried in dusty court filing cabinets – are electronically accessible for the world’s review and “Monday-morning quarterback” scrutiny. Attorneys conduct negotiations, conferences, and depositions with their national or even international counterparts over Skype, GoToMeeting, or Zoom. Lawyers establish permanent digital footprints through LinkedIn, Facebook, and Instagram. Legal communication is rapidly changing because of technological advances, disruptive business models, and globalism – forces that are transforming the 21st century world of law. The legal profession and legal educators – famously slow and often resistant to adaptation – must evolve with the times. Standing still, clinging to the “business as usual” status quo is not a luxury we can afford. ...

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Taxation, Inequality, And Life: An Interview With Ed Kleinbard

BYU Law School Magazine, On Taxation, Inequality, and the Citizen’s Role: An Interview With USC’s Professor Kleinbard:

Fleming:  You had a lengthy career at a high level of law practice followed by a period of high-level government service. How would you compare the satisfactions of those two parts of your professional life?

Kleinbard:  I enjoyed law practice very much. In contrast, from 2007 to 2009 my service as chief of staff of Congress’s Joint Committee on Taxation (jct) required me to be the principal non-partisan tax adviser to the most partisan collection of men and women on the planet. I was surprised at how little interest there was in improving our tax laws unless the improvement would advance a partisan agenda. Working as a staff member at jct is an interesting way of observing bare-knuckle politics, but the chief of staff is a job I wouldn’t wish on anyone. But the Treasury Department’s Office of Tax Policy and the irs’s Office of Chief Counsel are excellent places for young lawyers to both contribute to the public good and gain important skills and experience—usually without quite as much day-today political drama as one faces on the Hill. I highly recommend that kind of service.

Fleming:  What advice would you have for an undergraduate who is considering law school?

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Auerbach: Measuring The Effects of Corporate Tax Cuts

Alan J. Auerbach (UC-Berkeley), Measuring the Effects of Corporate Tax Cuts, 32 J. Econ. Perspectives 97 (Fall 2018):

On December 22, 2017, President Donald Trump signed the Tax Cuts and Jobs Act (TCJA), the most sweeping revision of US tax law since the Tax Reform Act of 1986. The law introduced many significant changes. However, perhaps none was as important as the changes in the treatment of traditional "C" corporations—those corporations subject to a separate corporate income tax. Beginning in 2018, the federal corporate tax rate fell from 35 percent to 21 percent, some investment qualified for immediate deduction as an expense, and multinational corporations faced a substantially modified treatment of their activities. This paper seeks to evaluate the impact of the Tax Cuts and Jobs Act to understand its effects on resource allocation and distribution. It compares US corporate tax rates to other countries before the 2017 tax law, and describes ways in which the US corporate sector has evolved that are especially relevant to tax policy. The discussion then turns the main changes of the Tax Cuts and Jobs Act of 2017 for the corporate income tax. A range of estimates suggests that the law is likely to contribute to increased US capital investment and, through that, an increase in US wages. The magnitude of these increases is extremely difficult to predict.

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The Number Of 1Ls By State (2017 v. 2010)

Law School Transparency lists the number of 1Ls by state in 2017 and the change in enrollment since 2010.  Twelve states had enrollment declines in excess of 1,000:

1. California: 4237 (-29.1%)
2. New York: 4147 (-20.6%)
3. Florida: 2297 (-38.5%)
4. Texas: 2199 (-14.2%)
5. Massachusetts: 1956 (-18.6%)
6. Illinois: 1818 (-25.5%)
7. Washington, D.C.: 1763 (-19.0%)
8. Michigan: 1405 (-48.2%)
9. Pennsylvania: 1393 (-24.2%)
10. Virginia: 1199 (25.4%) 
11. Ohio: 1069 (-35.3%)
12. North Carolina: 1055 (-35.1%)

24 states had enrollment declines in excess of 25%:

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Bird-Pollan: Sovereignty, Tax, And Bilateral Investment Treaties

Jennifer Bird-Pollan (Kentucky), The Sovereign Right to Tax: How Bilateral Investment Treaties Threaten Sovereignty, 32 Notre Dame J.L. Ethics & Pub. Pol'y 107 (2018):

Bilateral Investment Treaties, or “BITs,” are both a response to and likely at least partly responsible for the significant increase in international investments in the last fifty years. BITs provide potential private investors government assurances regarding a variety of factors relevant to their investments. Among these assurances, BITs regularly address the tax authority that the host government has with regard to the foreign investor, often protecting that foreign private investor against changes to the host country’s tax system. If an investor believes the host country has violated the terms of the BIT, that investor can bring a claim against the country in front of an independent arbitration panel, whose decision will be final and binding. Because the power to tax is at the heart of what makes a sovereign authority a sovereign, restrictions on a sovereign’s ability to tax foreign investors, which can be enforced by an external body, threaten that sovereign’s very essence. As a result, tax provisions in BITs and the adjudication of those provisions by arbitration bodies must be carefully examined and potentially reconsidered, to protect the sovereign rights of governments to assess tax, to evolve their tax policies, and administer the laws of their countries in the best interests of their people.

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Goldin Presents Ironing Out The Tax Law Today At San Diego

Jacob Goldin (Stanford) presents Ironing Out the Tax Law (with Edward Fox (Michigan)) at San Diego today as part of its Tax Law Speaker Series hosted by Jordan Barry and Miranda Perry Fleischer: 

The law is full of sharp lines, where small changes in one’s circumstances lead to significant changes in legal treatment. In many cases, a sharp line can be smoothed out — or “ironed” — by replacing it with a sliding scale. Under a sliding scale, small changes in one’s circumstances lead to small changes in legal treatment. In this paper, we study the policy choice between sharp lines and sliding scales in the tax law, focusing particularly on concerns related to efficiency, complexity, and administration. Sliding scales are common for tax provisions that depend on income, but relatively uncommon for provisions that depend on non-income factors.

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Hayashi Presents Countercyclical Tax Bases Today At Boston College

Andrew Hayashi (Virginia) presents Countercyclical Tax Bases at Boston College today as part of its Tax Policy Workshop Series hosted by Jim Repetti, Diane Ring, and Shu-Yi Oei:

Tax scholarship has tended to focus on the efficiency properties of different tax bases under assumptions about the macroeconomy that only sometimes hold, and has paid relatively little attention to how those bases operate in recessions. I show how different tax bases interact with household credit constraints and adjustment costs to either stabilize or aggravate economic shocks. I argue that the choice of the local tax base should consider the effect that the base has on the resilience of the economy by stabilizing government spending and household consumption expenditures.

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Slemrod: Is This Tax Reform, Or Just Confusion?

Joel Slemrod (Michigan), Is This Tax Reform, or Just Confusion?, 32 J. Econ. Perspectives 73 (Fall 2018):

Based on the experience of recent decades, the United States apparently musters the political will to change its tax system comprehensively about every 30 years, so it seems especially important to get it right when the chance arises. Based on the strong public statements of economists opposing and supporting the Tax Cuts and Jobs Act of 2017, a causal observer might wonder whether this law was tax reform or mere confusion. In this paper, I address that question and, more importantly, offer an assessment of the Tax Cuts and Jobs Act. The law is clearly not "tax reform" as economists usually use that term: that is, it does not seek to broaden the tax base and reduce marginal rates in a roughly revenue-neutral manner.

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A Legal Education Report Card

Barry Currier (Managing Director, ABA Section on Legal Education and Admissions to the Bar), A Legal Education Report Card:

If you were asked to grade legal education as an enterprise, what would be the categories or roles for which grades should be assigned? What grades would you give legal education? ... Here’s a first take:

Legal education must provide accessible, high quality legal education confirmed by measurable outcomes related to learning, skill development, and employment outcomes that serves well the students, the profession, and the public. Grade: A/F ...

[A]t its best, U.S. law schools offer an education of unsurpassed quality, and it is better than it has ever been. True, the education can be expensive, but for many the expense is justified by the careers that the education makes possible. At its worst, legal education carries a hefty price tag that leaves graduates with high debt and limited opportunities. ... The quality of programs, outcomes, and opportunities for graduates are a mixed bag across legal education as a whole, thus the A/F grade.

Legal education must conduct research that advances knowledge and protects/promotes the rule of law in the U.S. and the world. Grade: A

The research that has been and continues to be done in U.S. law schools is at or among the best in the world by almost any measure. It makes major contributions to the evolution of both public and private law, leads the growing conversation about the increased use of technology in law and the practice of law, and is increasingly interdisciplinary and global in approach. Legal education has been and continues to be blessed by the participation of some of America’s most talented and wise individuals.

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