TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Tuesday, September 18, 2018

Shaviro Reviews Zucman Et Al.'s The Missing Profits Of Nations

Jotwell (Tax) (2016)Daniel Shaviro (NYU), How Inevitable Is Corporate Tax Competition? (JOTWELL) (reviewing Thomas Tørsløv (University of Copenhagan), Ludvig Wier (University of Copenhagen) & Gabriel Zucman (UC-Berkeley), The Missing Profits of Nations (2018)):

How much profit-shifting, from high-tax to low-tax countries, do multinational companies (MNCs) engage in? The question is hard to answer, for both theoretical and empirical reasons. The “true” geographical source of profits earned by MNCs on their global production and sales activities would often be theoretically ambiguous even if their actions and decisions were completely transparent. In addition, however, not only is there a large gulf between what they know and what we (or the tax authorities) know, but relevant economic data may either be unavailable or reflect formalistic reporting conventions.

A recent literature review by Dhammika Dharmapala reports that, in the “more recent empirical literature, which uses new and richer sources of data, the estimated magnitude of [profit-shifting] is typically much smaller than that found in earlier studies.” James R. Hines goes further, asserting that profit-shifting is “notably small in magnitude,” and that any public (or even scholarly) impressions to the contrary merely reflect journalistically-driven over-excitement in response to a few “distasteful anecdotes of crass tax avoidance.”

But what if such conclusions—which are not, however, universal 3 —reflect data limitations? An important new National Bureau of Research Working Paper by Thomas Tørsløv, Ludvig Wier, and Gabriel Zucman (“Zucman et al”) makes novel use of macroeconomic data, comparing the wages and profits of MNCs’ foreign affiliates to those of local companies, both in tax havens and high-tax countries, to reach very different conclusions. Zucman et al find that forty percent of MNC profits are shifted to low-tax countries in a typical year, and that this estimate is conservative given the likely impact of statistical gaps. (P. 26.) ...

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September 18, 2018 in Scholarship, Tax | Permalink | Comments (0)

Symposium: Legal Issues Surrounding Race, Religion, Gender And Class

Symposium, Finding Unique Ways To Solve Legal Issues Surrounding Race, Religion, Gender and Class, 18 U. Md. L.J. Race, Religion, Gender & Class 1-234 (2018):

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September 18, 2018 in Law School Rankings, Scholarship | Permalink | Comments (0)

Glogower: Requiring Reasonable Comp From A Corp

Ari D. Glogower (Ohio State), Requiring Reasonable Comp from a Corp, 160 Tax Notes 961 (Aug. 13, 2018):

This Article considers whether a reasonable compensation requirement can be applied when a corporation makes no payment in any form to the shareholder-employee, and the implications of this question for changes under the 2017 Tax Legislation.

September 18, 2018 in Scholarship, Tax | Permalink | Comments (0)

WSJ: The IRS Is Still Going After Offshore Tax Cheats

Wall Street Journal Tax Report, The IRS Is Still Coming for You, Offshore Tax Cheats:

On Sept. 28, the Internal Revenue Service will end its program allowing American tax cheats with secret offshore accounts to confess them and avoid prison. In a statement, the IRS said it’s closing the program because of declining demand.

But the agency vowed to keep pursuing people hiding money offshore and said it will offer them another route to compliance.

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September 18, 2018 in IRS News, Tax | Permalink | Comments (0)

Moritz Family Fights Ohio State Over Undisclosed 1% Annual Development Fee Charged Against Naming Gift To Law School, As Endowment Has Shrunk From $30m To $22m In 17 Years

Ohio State LogoColumbus Dispatch, Moritz Family Fights Ohio State For Using Endowment to Pay For Fundraising:

A young Michael Moritz had promise and aspirations, but little money to realize them.

When Ohio State University surprisingly awarded Moritz a full-ride scholarship to law school in 1958, it transformed his life.

Over the decades, Moritz became a partner in a major law firm, a corporate-law expert in demand across the nation for mergers and acquisitions. As he built clients and respect, he also built a fortune.

In retirement, and out of gratitude, he gave back — big time — to his alma mater. In 2001, he donated $30.3 million to Ohio State to endow four faculty chairs and give 30 annual scholarships to needy law students. In recognition of the largest-ever gift to one of its academic units, Ohio State renamed its law college in honor of Moritz.

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September 18, 2018 in Legal Education | Permalink | Comments (0)

July 2018 Florida Bar Exam Results: Florida International Is #1 For 5th Year In A Row

Florida Bar 2The July 2018 Florida bar passage rates by school are out. The overall pass rate for first-time takers is 67.2%, down 4.1 percentage points from last year. For the fifth year in a row, Florida International is #1. Here are the results for the 11 Florida law schools, along with each school's U.S. News ranking (Florida and overall):

Bar Pass

Rank (Rate)

 

School

US News Rank

FL (Overall)

1 (88.1%)

Florida Int'l

5 (101)

2 (84.8%)

Florida State

2 (47)

3 (83.2%)

Miami

3 (65)

4 (70.9%)

Florida 

1 (41)

5 (70.2%)

St. Thomas

Tier 2

6 (67.2%)

Stetson

4 (98)

7 (62.5%)

Florida Coastal

Tier 2

8 (58.5%)

Ave Maria

Tier 2

9 (50.6%)

Florida A&M

Tier 2

10 (45.2%)

Barry

Tier 2

11 (42.9%)

Nova

Tier 2

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September 18, 2018 in Law School Rankings, Legal Education | Permalink | Comments (0)

Corporate America 'In Limbo' As IRS Punts On Foreign Tax Issue

Bloomberg, Corporate America `in Limbo' as IRS Punts on Foreign Tax Issue:

U.S. companies anxiously awaiting guidance on how hard they’ll be hit by a new foreign levy in the tax overhaul will have to stay tuned for at least another two months.

The Internal Revenue Service proposed regulations on Thursday spanning 157 pages that provide some details on which assets are subject to the tax on Gilti, or global intangible low-tax income, and how to calculate it. But one of the most pressing questions — to what extent multinational companies can use foreign tax credits and business expenses to offset the levy — remained unanswered.

“It’s a very big deal that the FTC and expense allocation issues have been left out,” said Andrew Silverman, a Bloomberg Intelligence analyst who focuses on tax policy. The regulations are “not a great answer for companies who are essentially left in limbo.”

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September 18, 2018 in Tax | Permalink | Comments (0)

Shanske & Ventry: Blue-State Republicans Fret Over 'Tax Reform 2.0' — Rightly So

The Hill op-ed:  Blue-State Republicans Fret Over 'Tax Reform 2.0' — Rightly So, by Darien Shanske & Dennis Ventry (UC-Davis):

The new tax bill, “Tax Reform 2.0,” is here, and it makes permanent the $10,000 cap on the state and local tax deduction (SALT) created by the Tax Cut and Jobs Act (TCJA) in December 2017.

Meanwhile, Republican politicians from districts where high percentages of taxpayers will be affected by the cap are wary of making the cap permanent. A deeper dive into theories of taxpayer psychology and tax policy indicates these politicians are right to be concerned. ...

Research indicates that dismay at this tax change might be quite politically salient to the taxpayer when making voting decisions [Three Essays on Tax Salience: Market Salience and Political Salience, 65 Tax L. Rev. 19 (2011)]. Compare the large — and explicit — jump in tax liability described above to an increase in withholding taxes from periodic paychecks.

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September 18, 2018 in Tax | Permalink | Comments (0)

Monday, September 17, 2018

Hemel Presents Beyond The Marriage Tax Trilemma Today At Loyola-L.A.

Hemel (2018)Daniel Hemel (Chicago) presents Beyond the Marriage Tax Trilemma at Loyola-L.A. today as part of its Tax Policy Colloquium Series hosted by Ellen Aprill and Katie Pratt:

For decades, the famous “marriage tax trilemma” has played a central role in discussions of the tax treatment of the family unit. The “trilemma” refers to the mathematical impossibility of constructing a tax system that imposes the same tax liability across all married couples with the same income (couples neutrality), neither encourages nor penalizes marriage (marriage neutrality), and taxes higher income individuals at higher rates (progressivity). Numerous articles have proposed responses to the trilemma that choose two of the legs over a third or that seek to split the difference among the competing neutrality norms that the trilemma casts as desirable. Most casebooks, meanwhile, use the trilemma to introduce students to the policy debate over the taxation of marriage and the household.

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September 17, 2018 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Guillot Presents Who Paid The 75% Tax On Millionaires? Today At UC-Berkeley

GuillotMalka Guillot (Ph.D. 2018, Paris School of Economics) presents Who Paid the 75% Tax on Millionaires? Optimization of Salary Incomes and Incidence in France at UC-Berkeley today as part of its Robert D. Burch Center for Tax Policy and Public Finance Seminar Series:

Using several administrative datasets, I study the impact of temporary tax on top wage income earners, implemented for 2013 and 2014 only and known as the "75% tax above 1m euro''. The tax is nominally paid by the firms. The tax base is gross annual salary income above one million euros and the top marginal tax rate on wage earners increased from 64% to 74% because of the tax. About 400 employers paid the tax each year and about 1000 employees were concerned. I document that the tax was largely borne by employers, who paid 80% of the tax.

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September 17, 2018 in Colloquia, Scholarship, Tax | Permalink | Comments (1)

July 2018 Multistate Bar Exam Scores Collapse To 34-Year Low

National Conference of Bar Examiners, July 2018 Average MBE Scores Decrease:

The national average MBE score for July 2018 was 139.5, a decrease of about 2.2 points from the July 2017 average:

MBE

This is the lowest score since 1984.

45,274 examinees sat for the Multistate Bar Examination in July 2018. This represents 2.9% fewer examinees than those who sat for the July 2017 exam, and is the smallest group of examinees to take the July MBE since 2001.

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September 17, 2018 in Legal Education | Permalink | Comments (2)

Call For Tax Papers And Panels: SEALS 2019 (Boca Raton, Florida)

SEALs Logo (2013)It's already time to think about SEALS 2019!  The conference will be held July 28-August 3, 2019 in Boca Raton, Florida.  The conference submission tool is now open, and I am eager to coordinate people who are interested in presenting tax work at the SEALS conference into relevant panel groups.  In addition, we have also had very successful Tax Policy Discussion Groups in recent years.  Panels are generally composed of 4 to 5 people speaking for 15 to 20 minutes each.  I will attempt to group papers so that panels include papers on similar topics.  The Discussion Group includes about 10 people, each speaking for 5-8 minutes on a topic related to tax policy, broadly interpreted.  This has often included topics that are not necessarily fully formed paper ideas, but are thoughts the presenter has had on something he or she would like to discuss with a group of smart, informed people in an informal setting.  Both types of presentation have been very successful in the past.  Each presenter may participate in one Panel AND one Discussion Group.

So, if you are interested in submitting to SEALS and would like me to include you in a group of other tax profs, please email jbirdpollan@uky.edu with the following information:

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September 17, 2018 in Conferences, Legal Education, Tax | Permalink | Comments (0)

Lesson From The Tax Court: Distinguishing Property Settlement From (Indirect) Alimony

Tax Court (2017)Congress eliminated the deduction for alimony in the December 2017 Reconciliation Act (informally called the Tax Cuts and Jobs Act).  But the legislation grandfathered in alimony payments made pursuant to divorce or separation instruments executed on or before December 31, 2018. The question of whether a payment qualifies as alimony will thus still be important for many taxpayers for years to come.  The short lesson from the recent decision in Jeremy Adam Vanderhal v. Commissioner, T.C. Sum. Op. 2018-41 (Sept. 5, 2018) is thus worth blogging about.  Plus, it's nice to blog about one of those very rare wins for a pro se taxpayer.

This is mainly a drafting lesson: the tax effect of language in a divorce or separation instrument turns on what the language does more than what the language says it does. Here, Judge Carluzzo gives a very nice lesson on how not to be distracted by what the language says it is doing.

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September 17, 2018 in Bryan Camp, New Cases, Scholarship, Tax | Permalink | Comments (2)

Tax Policy Center: GOP Tax Reform 2.0 Would Add $3.8 Trillion To Deficit

Washington Post, New Estimate: GOP’s Second Tax Cuts Would Add $3.8 Trillion to Deficit:

A second round of Republican tax cuts would add an additional $3.2 trillion to the federal deficit over a decade, according to a new report released by a centrist think-tank.

The package was taken up by a House committee on Thursday and is expected to head to a vote on the floor later this month.

The GOP’s “tax reform 2.0” would make permanent many of the individual and estate tax provisions in the tax law Republicans passed last fall, which the Congressional Budget Office said would already add about $1.9 trillion to the deficit, factoring for interest costs.

The second round of cuts would cost $631 billion before 2028 and an additional $3.15 trillion in the decade after that, according to the Tax Policy Center.

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September 17, 2018 in Tax | Permalink | Comments (1)

NY Governor Cuomo Calls For Inspector General To Investigate Politicization Of The U.S. Tax System

Governor Cuomo Calls for Inspector General to Investigate Politicization of the U.S. Tax System:

Call for Investigation Comes After Last Week's Egregious IRS Regulation "Clarification" Aimed at Benefitting Red States

Governor Andrew M. Cuomo today sent a letter to the Treasury Department's Office of Inspector General, calling for an investigation into the politicization of the U.S. tax system after the federal government's continued attempts to block New York's efforts to provide relief to middle class taxpayers while continuing to support programs in states that voted for President Trump. 

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September 17, 2018 in IRS News, Tax | Permalink | Comments (3)

TaxProf Blog Weekend Roundup

Sunday, September 16, 2018

Morse: Seeking Comparables In Patent And Tax

Susan C. Morse (Texas), Seeking Comparable Transactions in Patent and Tax, 37 Rev. Litig. Brief 1 (2018):

Most business firms do not go around licensing their crown jewel intellectual property to unrelated third parties. This presents a problem for both patent law and tax law. In patent litigation, setting damages for a reasonable royalty under Georgia Pacific invites the use of a benchmark royalty rate that would have been agreed to had the litigating parties negotiated a market rate in advance. This counterfactual analysis repeats in tax law when firms allocate taxable income among affiliates located in different tax jurisdictions. Transfer pricing rules similarly seek a price, such as a royalty, that would have been agreed to had the related affiliates negotiated a market rate as adverse, or “arm’s length,” parties.

In their Article, Tax Solutions to Patent Damages, Jennifer Blouin and Melissa Wasserman argue that tax transfer prices can provide some of the data needed to set patent litigation damages. One could also ask the converse, which is whether patent litigation outcomes can provide some data that tax transfer pricing needs. If patent law looks to tax transfer prices, it sees the advantage that the tax transfer prices are set ex ante when IP developed by one affiliate was first used by another affiliate. This roughly aligns with patent law’s touchstone of a “hypothetical negotiation” that produces an “ex ante” license. If tax law looks to patent law, it sees the advantage that patent damages emerge from an adversarial process. Patent damages may be set ex post, but their validity is bolstered by the fact that they are contested.

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September 16, 2018 in Scholarship, Tax | Permalink | Comments (0)

NY Times: Is California A Good Role Model For The Nation?

California (2016)New York Times op-ed:  Is California a Good Role Model?, by Thomas B. Edsall:

Conservatives argue that California’s liberal politics have failed. They point out that by one key measure the state now has the highest poverty rate in the nation and they argue that its liberal minimum wage and restrictive housing codes have more than a hundred thousand people homeless, more than a million unemployed and millions more stuck on the bottom rungs of the socioeconomic ladder.

Liberals see a dynamic California where wealth generated by Hollywood and an immigrant-rich high tech industry, in concert with a top university system, has fueled a politically dominant Democratic coalition of Hispanics, Asians, blacks and whites steadily moving millions of people up from where they started.

“This is a topsy-turvy debate,” Jonathan Rodden, a political scientist at Stanford, told me by email. “The left celebrates California’s rapid growth while turning a blind eye to its inequality. The right decries poverty and inequality while discounting rapid economic growth.”

The dispute raises three basic questions.

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September 16, 2018 in Tax | Permalink | Comments (3)

The Big Lie: Professor Who Fabricated Lateral Offer From University Of Minnesota To Get $5,000 Raise Reaches Plea Deal

McNaughtonFollowing up on my previous post:  Chronicle of Higher Education, The Big Lie

A professor schemed to get a raise and win his department’s respect. Instead, he wrecked his career.

The chemistry professor and his wife argued often in those days, as their marriage was coming to an end and a custody battle brewed over their two young children. Then, one summer night, things got so heated that the police were called to intervene.

Brian and Stacey McNaughton had bought their single-family home in Fort Collins, Colo., six years earlier for $525,000. It was the sort of place, situated on an oversize corner lot in a neighborhood filled with doctors and lawyers, that projected the kind of solid middle-class status that the couple had achieved after years of study. Brian McNaughton, once a first-generation college student, was on the tenure track at Colorado State University, and his wife was a nurse anesthetist.

But all of that risked being torn asunder because of the big lie — a lie that they shared, and that Stacey McNaughton was now threatening to expose. She would recount to the police how she had signaled plans to call her husband’s boss, reveal his deception, and derail his career. The couple struggled for control of a phone, and the professor pleaded with his wife to reconsider, before Stacey McNaughton ran out the back door screaming for help. She jumped a fence and took refuge with some neighbors who were having a backyard campfire.

On that night and many thereafter, Brian McNaughton feared that his wife would tell people at Colorado State how he had fabricated a job offer from another university. It was a simple scheme, one designed to earn him the kind of money and respect that is often so elusive for early-career professors. As McNaughton had hoped, the fake letter spurred a counteroffer, forcing his dean and department chair to reconsider what he might be worth.

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September 16, 2018 in Legal Education | Permalink | Comments (1)

The Top Five New Tax Papers

SSRN Logo (2018)SSRN has updated its list of the Top 5 Recent Tax Paper Downloads for the first time in a month:

  1. [440 Downloads]  Compelled Subsidies and the First Amendment, by William Baude (Chicago) & Eugene Volokh (UCLA)
  2. [276 Downloads]  The New Non-Territorial U.S. International Tax System, Part 1, by Daniel Shaviro (NYU) (reviewed by David Elkins (Netanya) here)
  3. [209 Downloads]  The Charitable Contribution Strategy: An Ineffective SALT Substitute, by Andy Grewal (Iowa)
  4. [145 Downloads]   The Death of the Income Tax (or, the Rise of America's Universal Wage Tax), by Edward McCaffery (USC)
  5. [142 Downloads]  Taxing the Robots, by Orly Mazur (SMU)

September 16, 2018 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

Saturday, September 15, 2018

This Week's Ten Most Popular TaxProf Blog Posts

What Can Law Schools Learn From Grade-Nondisclosure In Elite Business Schools?

JohnsonJohnson Students Vote to Enact Grade Non-Disclosure:

Johnson students have voted to enact a policy of grade non-disclosure, effective September 7, 2018. The student-driven policy applies to the school’s full-time students in its Two-Year, One-Year, and Johnson Cornell Tech MBA programs. ...

Under the terms of the referendum, students will not disclose their grades to recruiters until after a full-time, post-graduation job offer has been extended. The policy covers grade point averages (GPAs), grades in courses, and grades on assignments or exams. Exceptions include dual degree students who are pursuing non-MBA roles (e.g. JD/MBA candidates who needs to disclose their GPAs to law firm recruiters), Johnson Cornell Tech students applying to positions not restricted to MBAs at the Cornell Tech campus, and students applying for fellowships, public sector, international, and/or nonprofit positions.

“The exceptions are important. For example, for some positions, such as in the federal government, students are required to share a GPA,” says David Capaldi, MBA ’95, and director of Johnson’s Career Management Center. “Where the policy applies, we are asking that recruiters respect the student referendum and refrain from asking Johnson students about their grades.”

Poets & Quants, Cornell MBAs Join ‘Grade Non-Disclosure’ Ranks:

Grade nondisclosure advocates say the policy gives students freedom to branch out, to take more challenging classes without worrying about a negative impact to their GPAs. Because grades won’t be revealed to potential employers, any inclination to “take the easy way out” has been mitigated. Furthermore, an absence of academic competitiveness is thought to facilitate better networking and the development of stronger relationships.

Wharton, Stanford GSB, Chicago Booth, Northwestern Kellogg, UC-Berkeley Haas, Michigan Ross, and Columbia Business School are among the many elite schools with some form of grade non-disclosure. ...

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September 15, 2018 in Legal Education | Permalink | Comments (1)

Lawyers Spar Over Trump Tax Return FOIA Suit At D.C. Circuit

Trump Tax ReturnsNational Law Journal, Lawyers Spar Over Trump Tax Return FOIA Suit at DC Circuit:

A U.S. Department of Justice lawyer told a D.C. appeals court Thursday that an advocacy group seeking President Donald Trump’s tax returns hadn’t “perfected” its open records request, but at least one judge on the panel appeared skeptical.

Attorneys for the advocacy group Electronic Privacy Information Center and the DOJ sparred before the three-judge panel on the U.S. Court of Appeals for the D.C. Circuit, as part of EPIC’s continued bid to force the IRS to hand over Trump’s tax returns. U.S. District Judge James Boasberg of the District of Columbia tossed its Freedom of Information Act lawsuit last year, a ruling Epic appealed.

Michael Murray, a DOJ lawyer who argued on behalf of the IRS, urged the panel to keep the lower court ruling intact, insisting EPIC had not exhausted all remedies when it sought Trump’s tax returns through a Freedom of Information Act request.

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September 15, 2018 in Tax | Permalink | Comments (3)

More On The New U.S. News College Rankings

Friday, September 14, 2018

Weekly SSRN Tax Article Review And Roundup: Kleiman Reviews Shakow's Taxing Entities That Live On A Blockchain

This week, Ariel Jurow Kleiman (San Diego) reviews a new work by David J. Shakow (Penn), The Tao of The DAO: Taxing an Entity that Lives on a Blockchain, 160 Tax Notes 929 (Aug. 13, 2018).

StevensonMuch as governments have struggled for centuries to harness income flows transcending national borders, today governments face the novel challenge of taxing income flows that transcend the boundaries of the tangible world.  Specifically, blockchain technology has enabled cyberspace-based financial arrangements that trigger seemingly endless tax and regulatory quandaries. (See, e.g., here and here.)  David Shakow tackles one such quandary in his recent Tax Notes article, considering the tax treatment of income earned through a blockchain entity known as a decentralized autonomous organization (DAO).

Shakow’s article begins with a mercifully clear explanation of the formation, structure, and eventual demise of a specific DAO, called “The DAO.”  Formed in 2016 on the Ethereum blockchain platform, The DAO collected $150 million to invest in startup enterprises.  Under The DAO’s terms, anonymous investors would vote on which enterprises to invest in and would share in the profits.  All transactions occurred without the need for human involvement via the operation of “smart contracts” recorded in the Ethereum blockchain.  Human interveners were only necessary to confirm the identities of startup companies that submitted proposals for investment by The DAO.

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September 14, 2018 in Ariel Stevenson, Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)

Weekly Legal Education Roundup

Tax Policy In The Trump Administration

A College President's 'Modest Proposal' To Reform The U.S. News Rankings

USNChronicle of Higher Education op-ed:  The ‘U.S. News’ College Rankings: A Modest Proposal, by Brian Rosenberg (President, Macalester College):

As I enter my 16th year as a college president, it is long past time for me to correct an oversight about which I have been in recent times most troubled. 

I want to thank the good people at U.S. News & World Report for generously and wisely deciding to rank colleges and universities. ... [I]t is painful to think back to the days before 1983 — the first year of what I shall hereafter call The Rankings — a time when prospective college students were forced to select an institution without a number affixed to its name. Even to imagine a time when the distinction between College #37 and College #39 was concealed from the consumer is difficult. ...

Even the most successful of human endeavors, however, can aspire to be better, so, while of course deferring in the end to their greater wisdom, I would like to offer to the compilers of The Rankings a modest proposal for their improvement that would save time and effort and offer greater benefits to colleges and their future students.

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September 14, 2018 in Law School Rankings, Legal Education | Permalink | Comments (0)

Even Conservative Economists Question White House Claim That Corporate Tax Cuts Have Already Paid For Themselves

Bloomberg, Conservative Economists Question White House’s Corporate Tax Cut Claim:

Several conservative economists, including one of President Donald Trump’s campaign advisers, disputed the White House’s claim that a corporate tax cut Trump signed into law last year has already paid for itself.

Trump’s top economic adviser, Kevin Hassett, highlighted economic stimulus from the tax cuts as part of a presentation to reporters on Monday [America’s Economy is Booming Thanks to President Donald J. Trump] intended to strengthen Trump’s claim that U.S. economic growth is due to his policies. “I think that the notion that the corporate tax side has about paid for itself is clearly in the data,” Hassett said.

Some of his colleagues disagree. Stephen Moore, an economist at the conservative Heritage Foundation who advised Trump’s campaign, said Hassett’s claim is “a little premature, because we don’t know how long this boom will last.” Kyle Pomerleau, an economist at the conservative Tax Foundation, and Peter Morici, a conservative economist at the University of Maryland, also said Hassett’s claim went too far.

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September 14, 2018 in Tax | Permalink | Comments (0)

Higher Law School Tuition Boosts Enrollment

Law.com, Higher Law School Tuition Actually Boosts Enrollment, Study Finds:

There’s been no shortage of hand-wringing over the high cost of a law degree, but it turns out that hefty tuition prices aren’t a major factor in where aspiring lawyers opt to enroll.

That’s the takeaway from a new paper examining whether rising costs impact the number of people who apply and enroll in law school. Author Amy Li, a professor in the University of Northern Colorado’s department of leadership, policy and development, found that not only is there no correlation between lower costs and the number of applicants and matriculants at individual schools, but that increased costs correlate to higher enrollment at many private law schools. Put another way, enrollment tends to get bigger when schools charge more for tuition and fees, counterintuitive as that may seem.

“The findings highlight the willingness of students to apply to and enroll at law schools despite increases in tuition and fees,” Li wrote in her paper, Dollars and Sense: Student Price Sensitivity to Law School Tuition. “This study reveals that there is in fact, a lack of price sensitivity in legal education.” ...

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September 14, 2018 in Legal Education | Permalink | Comments (4)

Gonzaga Seeks To Hire A Tax Clinician

Gonzaga LogoGonzaga University School of Law seeks applicants for a three-quarter-time Lecturer in its Federal Tax Clinic, with flexibility to serve in other areas as needed by the clinical program. This position is dependent on a Low Income Taxpayer Clinic (LITC) grant awarded from the IRS. Gonzaga Law School has been receiving the LITC grant for over 15 years.

The teaching responsibilities of this 12-month-position include the supervision of students in all aspects of client representation, case selection, and client communication along with some administrative duties related to managing cases and record keeping associated with grants. This grant dependent position is a year-to-year, non-tenure track position.

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September 14, 2018 in Legal Education, Tax, Tax Prof Jobs | Permalink | Comments (0)

Stark: Implementation Negotiation

Tina Stark, a leader in transactional skills education for lawyers (Fordham, Emory, and Boston University), Implementation Negotiation: A Transaction Skill that Builds on and Transforms Classic Negotiation Theory, forthcoming, Transactions, The Tennessee Journal of Business Law.

Implementation negotiation is the specialized negotiation in which deal lawyers engage after the principals negotiate the business terms of the transaction. Classic negotiation principles guide these deal term negotiations. But once the parties agree, the dynamics, tone, content, and purpose of the negotiation change. Parties are no longer looking at whether they can find a way to agree. They do agree. Now, the lawyers must transform the clients’ bare bones agreed-on business terms into a contract that memorializes the parties’ joint vision. This is implementation negotiation, a new way of thinking about contract negotiations. Implementation negotiation theory does not displace classic negotiation theory. It simultaneously builds on that framework and transforms it to work in a different context. This article begins by reviewing classic negotiation theory and principles and then explains how implementation negotiation builds on and transforms those principles, including why BATNA recedes to the background, why seasoned negotiators know the parties’ interests and issues and the expected zone of agreement, even before negotiations begin. The article next details the multiple subcategories of implementation negotiation through narrative and a series of illustrative, simulated negotiations. It concludes by briefly discussing the implications of this new pedagogy for legal education.


When the business parties have agreed on the basic terms of a deal typically requiring far more complex documentation, it now falls upon the lawyers to get it done without blowing the deal.  This essay, chock full of examples, is in the tradition of James Freund's iconic Anatomy of a Merger, teaching both how to see the forest and how to deal with the trees.

September 14, 2018 in Legal Education, Scholarship, Teaching | Permalink | Comments (0)

Thursday, September 13, 2018

Hemel Presents Beyond The Marriage Tax Trilemma Today At Northwestern

Hemel (2018)Daniel Hemel (Chicago) presents Beyond the Marriage Tax Trilemma at Northwestern today as part of its Advanced Topics in Taxation Workshop Series hosted by Sarah Lawsky:

For decades, the famous “marriage tax trilemma” has played a central role in discussions of the tax treatment of the family unit. The “trilemma” refers to the mathematical impossibility of constructing a tax system that imposes the same tax liability across all married couples with the same income (couples neutrality), neither encourages nor penalizes marriage (marriage neutrality), and taxes higher income individuals at higher rates (progressivity). Numerous articles have proposed responses to the trilemma that choose two of the legs over a third or that seek to split the difference among the competing neutrality norms that the trilemma casts as desirable. Most casebooks, meanwhile, use the trilemma to introduce students to the policy debate over the taxation of marriage and the household.

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September 13, 2018 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Mehrotra Presents A Comparative History Of U.S. Resistance To The VAT Today At Boston College

Mehrotra (2017)Ajay K. Mehrotra (American Bar Foundation & Northwestern) presents The VAT Laggard: A Comparative History of U.S. Resistance to the Value-added Tax at Boston College today as part of its Tax Policy Workshop Series hosted by Jim Repetti, Diane Ring, and Shu-Yi Oei:

This project explores how and why the United States has historically rejected national consumption taxes. Nearly all developed countries, and many in the developing world, have some type of a national consumption tax, frequently in the form of a value-added tax (VAT). The United States is an exception. This project focuses on the fundamental question: why no VAT in the United States? To address this overall research question, this project explores three key historical periods.

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September 13, 2018 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Oei & Ring: Leak-Driven Tax Law

Shu-Yi Oei (Tulane) & Diane M. Ring (Boston College), Leak Driven Law, 65 UCLA L. Rev. 532 (2018):

Over the past decade, a number of well-publicized data leaks have revealed the secret offshore holdings of high-net-worth individuals and multinational taxpayers, leading to a sea change in cross-border tax enforcement. Spurred by leaked data, tax authorities have prosecuted offshore tax cheats, attempted to recoup lost revenues, enacted new laws, and signed international agreements that promote “sunshine” and exchange of financial information between countries.

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September 13, 2018 in Scholarship, Tax | Permalink | Comments (0)

Lateral Moves By BigLaw Partners: Age And Gender Implications

P. Cecchi-Dimeglio (Harvard) & H.A. Simons (Ropes & Gray, Boston), Lateral Moves: An Empirical Investigation of Cyclicality, Directional Mobility, and 5-Year Retention Rate by Gender and Age Cohort, 42 J. Legal Prof. 171 (2018):

The present empirical study examines the movements of lateral partners across Big Law firms in the context of what is known as "boundaryless career" movements. We provide statistical evidence on the patterns of the lateral moves of 2,353 partners who moved between AmLaw 100 firms between 2010 through 2012. Our research explores the cyclicality and directional mobility (upward versus downward in terms of new firm profit per partner (PPP) rank and absolute level of new firm PPP rank) of partner moves and their relationship to five-year retention rate (5 years from the initial move) from a gender and age cohort perspective.

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September 13, 2018 in Legal Education, Scholarship | Permalink | Comments (1)

Senate Confirms Pepperdine Law Grad Chuck Rettig As IRS Commissioner

RettigWall Street Journal, Senate Confirms Charles Rettig as IRS Commissioner:

The Senate confirmed Charles Rettig to run the Internal Revenue Service, giving the veteran California tax lawyer one of the toughest, most thankless jobs in the federal government.

Mr. Rettig, who spent his career representing wealthy taxpayers and businesses in complex disputes with the government, gets a term that runs until November 2022. He will replace David Kautter, the Treasury Department’s top tax policy official, who has been acting as IRS commissioner.

The Senate voted 64-33 in favor of Mr. Rettig’s confirmation. All Republicans who were present joined with 15 Democrats to back the nomination.

Mr. Rettig will run an agency struggling with flat or shrinking budgets, aging computer systems and increased demands from Congress. Last year, the IRS audited 0.62% of individual tax returns, the lowest rate since 2002. In 2017, the agency had 19% fewer employees than in 2010.

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September 13, 2018 in Legal Education, Tax | Permalink | Comments (2)

Job Satisfaction Among Tenured U.S. Law Professors

Katherine Y. Barnes (Arizona) & Elizabeth Mertz (Wisconsin), Law School Climates: Job Satisfaction Among Tenured US Law Professors, 43 Law & Soc. Inquiry 441 (2018)

In this article, we combine quantitative and qualitative methods to investigate why post‐tenure law professors of color and women professors within the US legal academy are differentially dissatisfied with their work lives. Previous social science research has indicated lingering difficulties for professionals from traditionally marginalized groups as they advance to higher levels. Post‐tenure law professors have been understudied relative to similar senior‐level professionals. Mixed methods allow us to isolate institutional structure and implicit cultural bias as key mediators of this dissatisfaction, converging on issues of respect, voice, and collegiality as crucial. We use the example of the legal academy to show how empirical research can shed important light on the realities of legal professionals—here, the faculty who are training the next generation of US attorneys. Following in the new legal realist tradition, we demonstrate the power of mixed empirical methodologies for grasping social realities pertinent to law.

September 13, 2018 in Legal Education | Permalink | Comments (0)

Villanova Seeks To Hire Director Of Its Graduate Tax Program

Villanova Grad Tax Program LogoVillanova is seeking to fill a faculty position and is in the process of a national search for a new Director of the Graduate Tax Program. The Graduate Tax Program is jointly run by the Law School and School of Business, and offers a Masters of Laws for lawyers and Masters in Tax for accountants.

The program is innovative and includes an extensive suite of online classes and classes on the ground. Villanova is looking for an experienced practitioner with teaching experience and management skills.

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September 13, 2018 in Legal Education, Tax, Tax Prof Jobs | Permalink | Comments (0)

Hemel & Kamin On Treasury's New SALT Regulations

David Kamin (NYU), Treasury’s SALT Regulations:

Treasury recently released regulations targeted at one of the strategies states are using to try to effectively maintain the deductibility of state and local taxes paid byindividuals. The regulations aim to stop states from doing so by creating charitable donation programs. These are programs in which residents give money to certain funds or organizations, take a charitable deduction for their giving, and then receive a tax credit — often nearly a one-for-one credit — reducing their state taxes in return. As a result, non-deductible state and local taxes get replaced by what is ostensibly charitable giving.

Treasury’s proposed regulations aim to stop these maneuvers by applying the quid pro quo doctrine to state and local tax benefits. Where applied (and it is applied inconsistently), the quid pro quo doctrine suggests that the amount of the charitable deduction is the difference between the value of what someone gives to a charity and what they get back in return if anything. It hadn’t previously been extended to state tax benefits, but the proposed regulation does so if those benefits exceed certain de minimis thresholds.

The question then is whether Treasury has the authority to take this action. My view is that it does have the discretion to go in this general direction, despite this representing a significant change in the treatment of state tax benefits. To be sure, the SALT cap is still deeply flawed, but, here, Treasury went in a reasonable direction given the mess it was handed. Key is that Treasury chose to treat the old tax credit programs in often “red” states the same as the new tax credit programs in the “blue” states. The possible alternative of discriminating between the red-state and blue-state programs would likely have been based on arbitrary and capricious reasoning in my view and thus should have been struck down by the courts.

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September 13, 2018 in Tax | Permalink | Comments (0)

Wednesday, September 12, 2018

Goldin Presents Complexity And Take-up Of The Earned Income Tax Credit Today At Michigan

Goldin (2017)Jacob Goldin (Stanford) presents Complexity and Take-up of the Earned Income Tax Credit (reviewed by Ari Glogower (Ohio State) here) at Michigan as part of its Tax Policy Workshop Series hosted by Reuven Avi-Yonah

Millions of low-income Americans fail to claim tax benefits for which they are eligible, possibly because the rules governing the benefits are extraordinarily complex. I consider efforts to increase tax benefit take-up in light of this complexity. A key fact is that the vast majority of tax filers today prepare their taxes with assisted preparation methods (APMs) like software or professional assistance. APMs eliminate some – but not all – of the barriers to claiming tax benefits for which one is eligible. With respect to claiming the Earned Income Tax Credit (EITC), I argue that most of the relevant complexity is the type that is eliminated by APMs. Consequently, efforts to increase EITC take-up should focus on inducing EITC-eligible individuals to file a tax return using an APM. In contrast, efforts aimed at increasing awareness of the credit (of the type widely employed by governments and nonprofits today) are less likely to be successful, except to the extent they themselves induce an increase in tax filing. Reforms that appear unrelated to a tax benefit may dramatically affect the benefit’s take-up by altering incentives to file a return.

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September 12, 2018 in Colloquia, Scholarship, Tax | Permalink | Comments (1)

Stark Presents State Charitable Tax Expenditures Before And After The TCJA Today At Minnesota

Stark (2014)Kirk Stark (UCLA) presents State Charitable Tax Expenditures Before and After the TCJA at Minnesota as part of its  Perspectives on Taxation Lecture Series hosted by Kristin Hickman:

Many states have long provided 100% tax credits for gifts to certain state-designated transferees, while other states recently have enacted similar but less generous credits for gifts to state-established funds. Both types of credits raise the question whether a donor may claim a full charitable contribution deduction for such gifts or instead must reduce the deduction amount by the value of the state tax savings arising from the gift. If a full deduction can be claimed despite the state tax savings, as the IRS has long allowed, then donors can effectively convert nondeductible taxes to deductible gifts.

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September 12, 2018 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

AccessLex Institute Awards $515,000 Grant To State Bar Of California For Job Analysis Study

California State Bar (2014)AccessLex Institute Awards Grant to State Bar of California for Job Analysis Study:

In step with its ongoing efforts to improve access, affordability and value in legal education, AccessLex Institute has awarded a grant of $515,000 to the State Bar of California to build on studies performed last year to address the state’s bar exam passage rate and other matters related to the exam. In 2017, the State Bar of California conducted a series of tests to evaluate various components of the California Bar Exam, including the pass line and the alignment of the subject matters on the exam in relation to the expected knowledge and skills of entry-level attorneys. While the studies represented a milestone in taking a comprehensive assessment of the California Bar Exam, the conclusions were limited partly due to the lack of appropriate information from an attorney job analysis study.

With funding from AccessLex, the State Bar of California is planning a California Attorney Job Analysis Study to collect detailed, empirical data about how attorneys in their daily routines use their knowledge and skills to perform their tasks with competency. Study results will set the foundation for revisiting issues with the bar exam pass line and content, as well as exam format and other aspects of the test.

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September 12, 2018 in Legal Education | Permalink | Comments (0)

Charlotte Law School Agrees To Pay $2.65m To Settle Accreditation Lawsuit

Charlotte Logo (2016)Law360, Law School Agrees To Pay $2.65M To End Accreditation Suit:

The Charlotte School of Law has agreed to pay $2.65 million to end a proposed class action alleging the shuttered school misrepresented and failed to inform students and prospective students about its compliance with American Bar Association standards and the status of its accreditation once the ABA had placed it on probation.

In a joint motion filed in North Carolina federal court, former students and the law school said Tuesday they had settled a consolidated proposed class action accusing the former institution of bilking students out of money even as it shirked its educational mission.

Students acknowledged that the settlement fund will not come close to reimbursing each of the 2,500 potential class members the average of $44,000 each spent on single year of tuition.

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September 12, 2018 in Legal Education | Permalink | Comments (0)

2019 U.S. News College Rankings

US NewsU.S. News & World Report has released its 2019 College Rankings. Here are the Top 25 National Universities and Liberal Arts Colleges (along with their 2016-2018 rankings):

2019

Rank

 

National Universities

2018

Rank

2017

Rank

2016

Rank

1

Princeton

1

1

1

2

Harvard

2

2

2

3

Chicago

3

3

3

3

Columbia

5

5

4

3

MIT

5

7

7

3

Yale

3

3

3

7

Stanford

5

5

4

8

Duke

9

8

8

8

Penn

8

8

9

10

Johns Hopkins

11

10

10

10

Northwestern

11

12

12

12

Cal-Tech

10

12

10

12

Dartmouth

11

11

12

14

Brown

14

14

14

14

Vanderbilt

14

15

16

16

Cornell

14

15

15

16

Rice

14

15

18

18

Notre Dame

18

15

18

19

UCLA

21

24

23

19

Washington (St. Louis)

18

19

15

21

Emory

21

20

21

22

Georgetown

20

20

21

22

UC-Berkeley

21

20

20

22

USC

21

23

22

25

Carnegie Mellon

25

24

23

25

Virginia

25

24

26

Pepperdine is ranked #46 (tied with Georgia and Illinois).

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September 12, 2018 in Law School Rankings, Legal Education | Permalink | Comments (6)

ABA Tax Section Releases 18th Annual Law Student Tax Challenge Problem

LSTCThe ABA Tax Section has released the J.D. Problem (rules; entry form) and LL.M. Problem (rules; entry form) for the 18th Annual Law Student Tax Challenge:

An alternative to traditional moot court competitions, the Law Student Tax Challenge asks two-person teams of students to solve a cutting-edge and complex business problem that might arise in everyday tax practice. Teams are initially evaluated on two criteria: a memorandum to a senior partner and a letter to a client explaining the result. Based on the written work product, six teams from the J.D. Division and four teams from the LL .M. Division receive a free trip (including airfare and accommodations for two nights) to the Section of Taxation 2019 Midyear Meeting, January 17-19, 2019 in New Orleans, where each team will defend its submission before a panel of judges consisting of the country’s top tax practitioners and government officials, including tax court judges. The competition is a great way for law students to showcase their knowledge in a real-world setting and gain valuable exposure to the tax law community. On average, more than 50 teams compete in the J.D. Division and more than 30 teams compete in the LL .M. Division.

IMPORTANT DATES

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September 12, 2018 in ABA Tax Section, Tax, Teaching | Permalink | Comments (1)

Committee Recommends Removal Of Boalt Name From UC-Berkeley Law School Building Due To John Boalt's 1870s Anti-Chinese Racism

Trump Tax Cuts Will Spur Even Greater Migration From High-Tax States To Low-Tax States

Chris Edwards (Cato Institute), Tax Reform and Interstate Migration:

This report looks at changes to individual income taxes, particularly the state and local tax (SALT) deduction. The 2017 tax law cut individual tax rates and roughly doubled standard deductions, but it also imposed a $10,000 cap per return on SALT deductions. Those changes are expected to reduce the number of households that deduct state and local income, sales, and property taxes from 42 million in 2017 to 17 million in 2018.

Millions of households will feel a larger bite from state and local taxes and will thus become more sensitive to tax differences between the states. The tax law may prompt an outflow of mainly higher-earning households from higher-tax states to lower-tax states.

Even before the new tax law, a substantial number of Americans were moving from higher-tax to lower-tax states. Looking at migration flows between the states in 2016, almost 600,000 people with aggregate income of $33 billion moved, on net, from the 25 highest-tax states to the 25 lowest-tax states in that single year. 

Of the 25 highest-tax states, 24 of them had net outmigration in 2016. Of the 25 lowest-tax states, 17 had net in-migration. The largest out-migration is from high-tax New York, whereas the largest in-migration is to low-tax Florida. Florida is enjoying an influx of wealthy entrepreneurs and retirees looking for a tax climate that boasts no income tax or estate tax.

Figure 1

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September 12, 2018 in Tax, Think Tank Reports | Permalink | Comments (2)

Tuesday, September 11, 2018

Remembering September 11th At Pepperdine

Waves

Tenth Annual Waves of Flags Display Honors 9/11 Victims:

For the 10th consecutive year, Pepperdine University’s Alumni Park will become home to the University’s annual Waves of Flags installation that, since 2008, has commemorated the lives lost in the terror attacks of September 11, 2001.

Waves of Flags will feature a display of a total of 2,977 full-size flags—2,887 American flags for each American life lost and 90 various international flags representing the home countries of those from abroad who died in the 9/11 attacks.

The installation became a University tradition in 2008 when the Pepperdine College Republicans, inspired by a similar display, wanted to bring the tribute to the University. Since then, Waves of Flags has become a significant service project for the Pepperdine community. On Saturday, September 8, 2018, a group of more than 200 volunteers, including Pepperdine faculty, staff, students, and Malibu community members, joined together to install and raise the flags.

In addition to the Waves of Flags installation, the Pepperdine community is invited to observe September 11 in honor of the heroes who were lost in 2001 with a brief service to remember the fallen and pray for peace and reconciliation. The service, hosted by the Pepperdine Office of the President and Office of the Chaplain, will be held Tuesday, September 11, at noon at the the Thomas E. Burnett, Jr., Heroes Garden on the Malibu campus. Heroes Garden is a public space for visitors to reflect and honor all those who live heroic lives, including Pepperdine alumnus Thomas E. Burnett, Jr. (MBA ’95), a passenger on United Flight 93 whose life was cut short in the 9/11 attacks. A plaque at the garden's entrance reads: "Dedicated to freedom's heroes of September 11, 2001, and the passengers of United Airlines Flight 93, among them Pepperdine alumnus Thomas E. Burnett, Jr., who sacrificed their lives to overcome terrorists’ intent on destroying American lives and landmarks in our nation's capital. We shall never forget."

Heores Garden

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September 11, 2018 in Legal Education, Tax | Permalink | Comments (0)

Brunson Presents God And The IRS At UC-Irvine

BrunsonSam Brunson (Loyola-Chicago) presented God and the IRS: Accommodating Religious Practice in the Tax Law (Cambridge University Press 2018) yesterday at UC-Irvine as part of its Tax Policy Colloquium Series:

Seventy-five percent of Americans claim religious affiliation, which can impact their taxpaying responsibilities. In this illuminating book, Samuel D. Brunson describes the many problems and breakdowns that can occur when tax meets religion in the United States, and shows how the US government has too often responded to these issues in an unprincipled, ad hoc manner. God and the IRSoffers a better framework to understand tax and religion. It should be read by scholars of religion and the law, policymakers, and individuals interested in understanding the implications of taxation on their religious practices.

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September 11, 2018 in Colloquia, Scholarship, Tax | Permalink | Comments (0)