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Thursday, September 18, 2014

Georgia Dean Finalists

Gale & Samwick: The Effects of Income Tax Changes on Economic Growth

William G. Gale (Brookings) & Andrew A. Samwick (Dartmouth), Effects of Income Tax Changes on Economic Growth:

This paper examines how changes to the individual income tax affect long-term economic growth. The structure and financing of a tax change are critical to achieving economic growth. Tax rate cuts may encourage individuals to work, save, and invest, but if the tax cuts are not financed by immediate spending cuts they will likely also result in an increased federal budget deficit, which in the long-term will reduce national saving and raise interest rates. The net impact on growth is uncertain, but many estimates suggest it is either small or negative. Base-broadening measures can eliminate the effect of tax rate cuts on budget deficits, but at the same time they also reduce the impact on labor supply, saving, and investment and thus reduce the direct impact on growth. However, they also reallocate resources across sectors toward their highest-value economic use, resulting in increased efficiency and potentially raising the overall size of the economy. The results suggest that not all tax changes will have the same impact on growth. Reforms that improve incentives, reduce existing subsidies, avoid windfall gains, and avoid deficit financing will have more auspicious effects on the long-term size of the economy, but may also create trade-offs between equity and efficiency.

Figure 4

Al Jazeera:  Tax Cuts Can Do More Harm Than Good, by David Cay Johnston (Syracuse):

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September 18, 2014 in Scholarship, Tax | Permalink | Comments (0)

Thomas: The Psychic Cost of Tax Evasion

Kathleen DeLaney Thomas (North Carolina), The Psychic Cost of Tax Evasion, 56 B.C. L. Rev. ___ (2015):

Each year, the government loses hundreds of billions of dollars in tax revenue due to underreporting by individual taxpayers. According to standard deterrence theory, policymakers should be able to reduce tax evasion by increasing tax penalties, raising the audit rate, or some combination of the two. This Article refers to these strategies as increasing the “monetary cost” of tax evasion. To date, budgetary limitations and political hurdles have made these strategies difficult for the government to employ.

There is, however, another potential means by which the government can improve tax compliance, apart from raising the monetary cost of evasion. Empirical evidence shows that people experience some form of psychological discomfort when they are dishonest, which may deter them from cheating. This Article proposes employing subtle behavioral interventions that encourage more honest tax reporting by raising the level of psychological discomfort experienced from underreporting. I refer to this approach as increasing the “psychic cost” of tax evasion.

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September 18, 2014 in Scholarship, Tax | Permalink | Comments (0)

Freedman: Designing a General Anti-Abuse Rule: Striking a Balance

Judith Freedman (Oxford), Designing a General Anti-Abuse Rule: Striking a Balance:

This article argues that statutory general anti-avoidance or anti-abuse provisions (GAARs) are an essential part of a modern tax system, since specific legislation will not catch every abuse. Properly drafted GAARs with appropriate protections can give administrators and courts an important tool to use in cases of egregious abuse, but the use must be within a legitimate framework suitable for the jurisdiction in question. GAARs are not the appropriate mechanism for a fundamental rewriting of domestic or international tax law, but they are a valuable element of the statute book in the fight to combat artificial tax arrangements.

September 18, 2014 in Scholarship, Tax | Permalink | Comments (0)

Cassidy: Reforming the Law School Curriculum from the Top Down

R. Michael Cassidy (Boston College), Reforming the Law School Curriculum from the Top Down, 64 J. Legal Educ. ___ (2014):

With growing consensus that legal education is in turmoil if not in crisis, law schools need to take advantage of industry upheaval to catalyze innovation in the way they train their students. Curriculum reform, long the “third rail” of faculty politics, is now essential if some law schools are going to survive the present tsunami of low enrollments and stagnant hiring. One cautiously optimistic note within this doomsday symphony is that law school deans are now in extremely strong bargaining positions with their faculties and boards of trustees with respect to curriculum innovation.

In this essay, the author proposes a pivotal reform to the third year curriculum involving team-taught “Advanced Legal Problem Solving” workshops in subject specific areas, and describes the precise structure, content and staffing of such capstone courses. He argues that such workshops would significantly enhance the preparation of law students for entry into the profession, and would create an efficient and cost-effective route for law schools to satisfy rigorous new ABA accreditation standards regarding experiential learning and outcomes assessment.

September 18, 2014 in Legal Education | Permalink | Comments (1)

NY Times Debate: Should the ABA Allow Paid Externships for Law Students?

NY Times Room for DebateNew York Times Room for Debate: Getting Pay and Credit for a Legal Education:

The American Bar Association prohibits law students from receiving pay for internships and externships that grant them academic credit. Critics have pressured the organization to reverse this standard, as law students face mounting debt and a slow job market.

Should law students be compensated for internships that count toward graduation?

  • Michael Cardozo (Partner, Proskauer Rose, New York), Don’t Deny Credit When Credit Is Due:  "Government and nonprofit offices provide part-time work and academic credit, which would be denied if the students were paid."
  • Olympia Duhart (Professor, Nova Law School), Money Changes Everything:  "Yes, law students need money but rolling back the prohibition on allowing them to receive pay and credit for the same work ignores some key realities."
  • Aaron Sohaski (Student, Cooley Law School), Let Us Get Paid:  "Before granting credit, law schools could still evaluate paid externship opportunities on a case-by-case basis to ensure they meet stringent educational requirements."

September 18, 2014 in Legal Education | Permalink | Comments (0)

One Law Prof, Two Lawyers Receive $625,000 MacArthur Fellowships

Mcarthur-foundationOne law professor and two lawyers are among the 21 recipients of $625,000 MacArthur Fellowships (formerly Genius Grants):

Sarah Deer (Professor of Law, William Mitchell)

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September 18, 2014 | Permalink | Comments (1)

Public Finance Textbooks and the Excess Burdens of Taxation

Public FinanceCecil Bohanon, John Borowitz & James McClure (all of Ball State), Saying Too Little, Too Late: Public Finance Textbooks and the Excess Burdens of Taxation, 11 J. Econ. Watch 277 (2014):

Taxation has several significant excess burdens, including enforcement costs, compliance costs, and deadweight losses. Most estimates find that raising a dollar of tax revenue costs much more than a dollar. Unfortunately, commonly used public finance textbooks do not integrate these costs into discussions of public goods or cost-benefit analyses. Not including these costs means that the optimal levels of public goods will be overestimated. Textbooks say too little, too late about the excess burdens of taxation. They could easily introduce excess burdens early, represent them in public goods diagrams, and integrate them throughout public finance instruction.

September 18, 2014 in Book Club, Scholarship, Tax | Permalink | Comments (1)

Philadelphia Trial Lawyer Gives $50 Million to Drexel Law School; 4th Largest Gift to a U.S. Law School

Philadelphia Inquirer, Trial Lawyer Kline Gives $50M to Drexel Law School:

DrexelIn one of the largest gifts ever to a U.S. law school, Drexel University said Wednesday that Philadelphia trial lawyer Thomas R. Kline will give the eight-year-old institution $50 million to bolster its effort to reach the top ranks of legal education.

Drexel president John A. Fry said the money will be used to fund scholarships, add faculty and to expand the law school's trial advocacy program, which provides training for lawyers who plan to focus on courtroom practice.

Included in the gift is the former Beneficial Saving Fund Society building at 12th and Chestnut Streets, an imposing classical revival style structure that has been vacant since 2001 and that will house the law school's Institute for Trial Advocacy.

In recognition of the gift, the law school will be named the Thomas R. Kline School of Law. ...

Kline’s gift is the fourth-largest ever to a U.S. law school, Drexel said. The largest was a $130 million contribution to the University of Arizona law school in 1999 from broadcasting executive James Rogers; next is a $100 million gift from Domino’s Pizza founder Thomas S. Monaghan to the law school of Ave Maria University in Florida; in third place is a $55 million gift to the Chapman University law school from real estate developer Dale E. Fowler and his wife, Sarah Ann.

September 18, 2014 in Legal Education | Permalink | Comments (3)

The IRS Scandal, Day 497

IRS Logo 2Wall Street Journal:  Koskinen Faces Fresh IRS Fire at House Hearing:

House Republicans took Internal Revenue Commissioner John Koskinen to task again on Wednesday, citing his recent criticisms of congressional investigations into alleged IRS targeting of conservative groups. Wednesday’s hearing marked a renewal of GOP attacks on the IRS chief, after a period of relative quiet while Congress was on its summer break.

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September 18, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Wednesday, September 17, 2014

Census Bureau: U.S. Income Flat, Poverty Rate Falls

A Red Letter Day at Pepperdine

Red LetterAs I have blogged before, one of my favorite things about Pepperdine is the opportunity to meet some of the interesting people drawn to this place.  I had the privlege last night of hearing Tony Campolo deliver a public lecture, followed by a breakfast meeting this morning with Tony and fifty students, faculty, and staff to discuss his provocative book, Red Letter Revolution, co-authored with Shane Claiborne (whom I blogged about here):

For all the Christians facing conflict between Jesus’ words and their own lives, for all the non-Christians who feel they rarely see Jesus’ commands reflected in the choices of his followers, Red Letter Revolution is a blueprint for a new kind of Christianity, one consciously centered on the words of Jesus, the Bible’s “red letters.”

Framed as a captivating dialogue between Shane Claiborne, a progressive young evangelical, and Tony Campolo, a seasoned pastor and professor of sociology, Red Letter Revolution is a life-altering manifesto for skeptics and Christians alike. It is a call to a lifestyle that considers first and foremost Jesus’ explicit, liberating message of sacrificial love.

Shane and Tony candidly bring the words of Jesus to bear on contemporary issues of violence, community, Islam, hell, sexuality, civil disobedience, and twenty other critical topics for people of faith and conscience today. The resulting conversations reveal the striking truth that Christians guided unequivocally by the words of Jesus will frequently reach conclusions utterly contrary to those of mainstream evangelical Christianity.

September 17, 2014 in Book Club, Legal Education, Tax | Permalink | Comments (0)

NFL’s Tax Break Foes Face 4th and 20

NFLBloomberg:  NFL’s Tax Break Foes Face 4th and 20 With Wind in Face, by Richard Rubin:

If there were ever a politically opportune time for Congress to remove the National Football League’s tax exemption, it would seem to be now.

A handful of U.S. lawmakers have seized on the domestic violence, child abuse and team-name controversies swirling around the league to renew calls for ending the tax break for the NFL’s central office. They aren’t making much progress, though, in advancing a measure through Congress.

Influential lawmakers in both parties, dealing with military action in Iraq and Syria and international tax rules, aren’t interested. That adds a roadblock in a Congress that can’t pass tax policies on which there is broad agreement. ...

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September 17, 2014 in Tax | Permalink | Comments (0)

More on Faculty Development, Faculty Incentives, and Law School Innovation

Following up on my previous post,  Faculty Development, Faculty Incentives, and Law School Innovation:  American Bar Foundation, Analyzing Carnegie's Reach: The Contingent Nature of Innovation:

ABF 3Analyzing Carnegie’s Reach: The Contingent Nature of Innovation, a recent article published in the Journal of Legal Education [63 J. Legal Educ. 585 (2014)] by ABF Research Professor Stephen Daniels (with Martin Katz and William Sullivan), explores curricular innovation and institutional change in American law schools between 2001 and 2011. Since the economic downturn of 2008–09 and the related contraction of the legal market, lawyers, journalists, legal educators and pundits have written and debated about the state of legal education and the need for change. Given rising levels of student debt, and shrinking job prospects, is law school “worth it”? Are law students well prepared to enter the market? Are the schools too beholden to the ranking system of US News and World Report, and other similar outlets? There has been discussion of “failing law schools,” even an influential book by that title by Brian Tamanaha, of Washington University School of Law (University of Chicago Press, 2012), but far too little systematically collected and analyzed data on what efforts law schools have or have not made to change the status quo.

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September 17, 2014 in Legal Education, Scholarship | Permalink | Comments (0)

Aprill: Reconciling Nonprofit Self-Dealing Rules

Ellen P. Aprill (Loyola-L.A.), Reconciling Nonprofit Self-Dealing Rules, 48 Real Prop. Tr. & Est. L.J. 411 (2014):

Charities must serve public rather than private interests. Much of the enforcement effort in this area of the law tries to ensure that such organizations do not engage in impermissible self-dealing, that is, in providing unreasonable benefits to insiders. That is, limits on self-dealing are crucial to regulation of this section. Both state law and federal tax law include provisions designed to prevent such behavior. These laws, however, often exhibit inefficiencies and differences that impose unnecessary burden on organization seeking to comply with applicable law.

State law regulates both trusts and nonprofit corporations. If the organization is formed as a trust, the “no further inquiry rule” of common law applies. Under this rule, a trustee, whether of a charitable trust or a private trust, is per se liable so long as a beneficiary shows that the trustee had a personal interest in the transaction; harm to the trust is irrelevant. If the organization is formed as a corporation, nonprofit corporation statutes generally include requirements as to the procedures for board approval of self-dealing transactions, procedures that, in practice, are usually easy to meet.

Tax law supplies self-dealing rules for organizations exempt under section 501(c)(3) of the Internal Revenue Code. Under federal tax law, public charities must satisfy the so-called intermediate sanction rules, which impose excise taxes on transfers between the organization and an insider that confer an “excess benefit” on the insider. Private foundations, which are section 501(c)(3) organizations that, in general, receive their support from a single individual or corporate source or family group and make grants to other charitable organizations, face stricter rules than public charities regarding self-dealing. They face two-tier excise taxes that in practice prohibit transactions between the private foundation and certain specified insiders, even when the transaction would benefit the organization.

This article uses both the economic theory of deterrence and norms theory to argue for a change to both state law and federal tax law. Using the California nonprofit corporation statute and the availability of individual exemptions from the prohibited transactions rules of ERISA, it argues for advance approval procedures. Making state and federal self-dealing rules as similar as possible would best carry out the rules’ shared purpose. Reconciling these rules would aid nonprofit charitable organizations in adopting a set of operating procedures to ensure compliance with the various laws applicable to them. Similar rules would also render state and federal enforcement easier and more efficient.

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September 17, 2014 in Scholarship, Tax | Permalink | Comments (0)

Thomas Jefferson Law School Defaults on $133m of Junk Bonds, Hopes to Restructure Debt and Remain Open

Thomas Jefferson LogoFollowing up on my previous post, S&P Downgrades Many Law Schools, Thomas Jefferson Falls to Junk Bond Status:  Above the Law, Troubled Law School Defaults On Its Bonds, May Be Forced To Cease Operations:

Under the copy of the Event Filing and Agreement we received, the law school had until September 5, 2014, before remedial action would be taken by its Bondholders under the direction of its acting Trustee. ...  (Ed. note: In its official response, TJSL states that a new Agreement is now in effect, and that it runs through October 17, 2014.) Thomas Jefferson Law may not be able to stay open if it can’t restructure its financial obligations, which currently total $133,390,000. As set forth in the Agreement, TJSL pledges that it will “work in good faith to diligently negotiate a reasonable restructuring of its obligations under the Loan Agreement that will enable TJSL to remain in operation.”

We received this official statement from a representative of the Thomas Jefferson School of Law after the original story was published exclusively on Above the Law:

While it is correct that the School did not make a payment on June 26th, the School has paid most of the June payment and has engaged in constructive dialogue with its bondholders to restructure its obligations. Those constructive discussions have resulted in a series of agreements through which the bondholders have agreed not to exercise their remedies. The most current such agreement runs through October 17th (not September 5), and we are confident that a consensual restructuring will occur.

For several months the School, its legal counsel, and financial advisors have worked closely with the bondholders, their representatives, legal counsel, and financial advisors. The parties have a mutual interest restructuring the law school’s debt in a way that will allow the school to remain in operation and prosper. As part of the negotiations, various potential structures and restructuring alternatives have been discussed. At the core of each alternative is ensuring the school can provide the educational experience required of an ABA accredited school and ensure the school’s long term success.

The parties are currently considering the various approaches that have been developed by the advisors to the school and the bondholders, and are confident that an agreement will be reached in the near term.

The School expects to have additional positive information concerning our work with the bondholders within the next few weeks. Because a restructuring of the School’s obligations to the bondholders is likely, the School believes that it will be able to continue to prosper.

ABA Journal, Law School Misses Bond Payment, Seeks to Restructure Obligations

Thomas Jefferson's students have the lowest bar exam pass rate (50%) among California's 21 ABA-accredited law schools; the second-fewest full-time, long-term jobs as lawyers (29%) within nine months of graduation among California's 21 ABA-accredited law schools; and the most law school debt ($180,665) among the nation's 200 law schools.  Thomas Jefferson's latest available Form 990 lists the Dean's total compensation as $528,430 and nine other faculty and adminstrations with total compensation in excess of $175,000.

Update:  Wall Street Journal, Thomas Jefferson School of Law Gets Reprieve after Missed Bond Payment:

Thomas Jefferson School of Law is scrambling to restructure its debt after blowing a bond payment deadline.

The downtown San Diego private law school has disclosed in a financial filing that it failed to meet its entire debt obligations in June. But an agreement the school struck with creditors staves off doomsday at least until Oct. 17, while requiring it to come up with another $2 million.

School officials say they’re counting on reaching a restructuring deal with bondholders, who’ve agreed not to pursue legal remedies for the time being.

September 17, 2014 in Legal Education | Permalink | Comments (7)

PolitiFact: Democrats Are Recycling False Accusation That Republicans Support Tax Breaks for Companies That Ship Jobs Overseas

PolitiFact.com, Is There a Corporate Tax Break That Ships Jobs Overseas?:

FalseDemocrats and their advocates have washed, rinsed and are now repeating one of their favorite talking points from 2012: that "(Insert Republican Here) supports tax breaks for corporations that ship jobs overseas."

There’s a lot packed into this insult. It implies that the person on the receiving end is beholden to corporate interests, against sensible tax reform and unconcerned about American employment. It plays to Americans’ economic woes and fits into the recent discussions about corporate tax reform, following Burger King’s merger with a Canadian company.

 

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September 17, 2014 in Tax | Permalink | Comments (5)

Tax Doubts Dampen Hiring by US Companies

Financial Times, Tax Doubts Dampen Hiring by US Companies:

US chief executives see little chance of Congress reforming the country’s tax system after November’s midterm elections, leaving them cautious about hiring and investing for the next six months, a survey of chiefs has found.

Randall Stephenson, chief executive of telecoms group AT&T, said pessimism over the prospect of tax reform – which big business wants – explained a “disconnect” between corporate expectations of rising sales and timid spending plans.

The Business Roundtable, a lobby group that Mr Stephenson chairs, released a quarterly survey of 135 chief executives that showed companies scaling back their plans for recruitment and business investment from three months ago.

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September 17, 2014 in Tax | Permalink | Comments (2)

QS World University Rankings 2014-15

QSQS World University Rankings 2014-15:

1.  MIT
2.  Cambridge
2.  Imperial College London
4.  Harvard
5.  Oxford
5.  University College London
7.  Stanford
8.  Cal-Tech
9.  Princeton
10.  Yale
11.  Chicago
12.  ETH Zurich (Swiss Federal Institute of Technology)
13.  Penn
14.  Columbia
14.  Johns Hopkins
16.  King's College London
17.  Edinburgh
17.  Ecole Polytechnique Fédérale de Lausanne
19.  Cornell
20.  Toronto
21.  McGill
22.  National University Singapore
23.  Michigan
24.  Ecole normale supérieure, Paris
25.  Australian National
25.  Duke

QS 2

September 17, 2014 in Law School Rankings, Legal Education | Permalink | Comments (4)

The IRS Scandal, Day 496

IRS Logo 2New York Times op-ed:  Apples and Hurricanes: Obama Beyond Bush, by Frank Bruni:

Whenever Barack Obama seems in danger of falling, do we have to hear that George W. Bush made the cliff? ... The I.R.S. scandal was not as bad as Watergate. (Nothing’s ever as bad as Watergate, which serves a nifty historical function as the gold standard of executive malfeasance and mendacity.) ...

If we’re determined to glance back at a figure who flatters Obama, let’s really have at it and look all the way to Warren Harding. Golf wasn’t his only distraction. He also had a thing for poker. And when it came to seeming and feeling overwhelmed, the 29th president, an Ohio Republican, reputedly confessed to friends that he was lost in the job. By that measure Obama is a rock. But it doesn’t make him a boulder.

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September 17, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Tuesday, September 16, 2014

Blank Presents Reconsidering Corporate Tax Privacy Today at UC-Irvine

BlankJoshua D. Blank (NYU) presents Reconsidering Corporate Tax Privacy, 11 N.Y.U. J. L. & Bus. ___ (2014), at UC-Irvine today as part of its Faculty Workshop Series:

For over a century, politicians, government officials and scholars in the United States have debated whether corporate tax returns, which are currently subject to broad tax privacy protections, should be publicly accessible. The ongoing global discussion of base erosion and profit shifting by multinational corporations has generated calls for greater “tax transparency.” Throughout this debate, participants have focused narrowly on potential reactions of a corporation’s managers, shareholders and consumers to a requirement that the corporation publish its own tax return information. There is, however, another perspective: how would the ability of a corporation’s stakeholders and agents to observe other corporations’ tax return information affect the corporation’s compliance with the tax law?

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September 16, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Google-Style Tax Dodging Targeted as OECD Draws Up Battle Plan

Bloomberg:  Google-Style Tax Dodging Targeted as OECD Draws Up Battle Plan, by Jesse Drucker:

BEPS 2The tax-avoidance strategies that companies like Google Inc., Apple Inc. and Amazon.com Inc. use to escape more than $100 billion a year of levies in the U.S. and Europe are under threat from a plan drawn up by the Organization for Economic Cooperation and Development.

The Paris-based OECD, a research institute funded by 34 countries including the U.S., recommended governments limit the techniques those companies use to avoid taxes, such as assigning valuable patent rights to shell companies based in tax havens, according to draft rules released today. All of the OECD member countries and 10 others, including China and Russia, have approved the recommendations, though further action by countries would be required for them to take effect.

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September 16, 2014 in Tax | Permalink | Comments (0)

Retired IRS Agent Pushes NY to Audit Tax Cheats

Following up on my previous posts (links below):  Albany Times-Union, Audits Sought on Tax Cheats:

New York StateFor two years, a retired Internal Revenue Service officer has been urging state officials to audit big real estate partnerships, particularly in Manhattan, to track down tax cheats owing the state hundreds of millions of dollars.

But Jerry Curnutt hasn't gotten traction at the state Department of Taxation and Finance, and he hasn't been able to impress upon the state comptroller or attorney general how big a deal the matter is. "Why are they not doing them?" he said. "The reason: Don't make waves."

David Cay Johnston, the Pulitzer-Prize winning tax reporter for the New York Times, is so sure of Curnutt's abilities in finding real estate partnership tax cheats that the journalist said he would pay $10,000 out of his own pocket to cover Curnutt's fees. Curnutt, a 77-year-old consultant from Texas who retired from the IRS in 2000, was employed by Pennsylvania for six years on such an assignment through 2008. During that time he charged the state $190,483, at $140 an hour plus expenses. The Keystone State assessed $49 million against real estate partners who had not reported gains, its tax department said. "Additionally, Curnutt helped the department develop a case involving $700 million in nonreported income," said Department of Revenue spokeswoman Elizabeth Brassell.

September 16, 2014 in IRS News, Tax | Permalink | Comments (2)

A Bad Dream: Tax Code Grounds Airport's Plans to Install Sleeping Pods for Passengers

Alaska Dispatch News, IRS Regulations Prevent Sleeping Pods at Anchorage Airport:

Sleep PodsPlans to install sleeping pods at Ted Stevens Anchorage International Airport have been grounded by, of all things, Internal Revenue Service codes.

The pods, which were planned for the airport's C concourse, would have contained two to three bunks each for weary and laid-over travelers to get some cheap rest before boarding their next flight. Their installation would have made Anchorage's airport one of the first in the nation to utilize the so-called "micro hotels" and would have increased the airport's already growing nonflight revenue.

But after going through an IRS audit a few months ago, airport bond managers noticed a prohibition in the tax code covering allowable uses for tax-free bonds against building lodging facilities.

And there's the catch. The main terminal and C Concourse have been renovated (beginning in 1999) with a combination of AMT tax-free bonds and private equity bonds. With more than $500 million still outstanding on the tax-free AMT bonds, the airport is bound by IRS codes that are meant to prohibit public bonds from being used to compete with private businesses.

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September 16, 2014 in Tax | Permalink | Comments (4)

Romney-Sized IRAs Get Scrutiny as Government Studies Tax Breaks

Bloomberg:  Romney-Sized IRAs Get Scrutiny as Government Studies Tax Breaks, by Richard Rubin:

About 9,000 U.S. taxpayers have each accumulated at least $5 million in individual retirement accounts, said the Government Accountability Office, raising questions about some investors’ tax-advantaged returns.

The preliminary report attaches data to an issue that drew attention during the 2012 presidential campaign, when Republican nominee Mitt Romney reported an IRA worth $20 million to $102 million. ...

Today’s GAO report said someone who contributed the maximum amount each year to an IRA from 1975 to 2011 and invested it in the Standard & Poor’s 500 Index would have about $350,000. The maximum contribution this year is $5,500, plus an extra $1,000 for people age 50 and older.

GAO, Preliminary Information on IRA Balances Accumulated as of 2011 (Sept. 16, 2014):

For tax year 2011 (the most recent year available), an estimated 43 million taxpayers had individual retirement accounts (IRA) with total reported fair market value of $5.2 trillion. About 99 percent of those taxpayers had aggregate IRA balances (including inherited IRAs) of $1 million or less. As shown in the table below, few taxpayers had aggregated balances exceeding $5 million as of 2011. Generally, taxpayers with IRA balances of $5 million or more tend to have higher adjusted gross incomes, be joint filers, and 65 or more years old. The Internal Revenue Service (IRS) statistical data GAO analyzed may not provide a precise estimate of the number of taxpayers or other quantities when the number of taxpayers in a particular reporting group is very small. Even assuming maximum contributions sustained over decades and rolled over from an employer plan, it would take an aggressive stock market investment strategy to accumulate an IRA balance over $5 million. There is no total statutory limit on IRA accumulations or rollovers from employer defined contribution plans. An individual who made the maximum contributions every year since 1975 to a traditional IRA could have accumulated about $303,420 achieving investment returns equal to the average annual Social Security interest rates.

Estimated Taxpayers with IRA by Size of IRA Balance, Tax Year 2011

Number of taxpayers

Total IRA fair market value balances($ Billions)

IRA Balance

Estimate

95% confidence

interval

Estimate

95% confidence

interval

$1 million or less

42,382,192

42,094,009

42,670,375

$4,092

$4,038

$4,147

> $1to $2 million

502,392

470,897

533,887

674

632

717

> $2 to $3 million

83,529

72,632

94,426

198

173

224

> $3 to $5 million

36,171

30,811

41,531

133

114

153

> $5 to $10 million

7,952

6,120

9,783

52

40

64

> $10 to $25 million

791

596

985

11

8

13

> $25 million

314

115

650

81

8

225

September 16, 2014 in Gov't Reports, Tax | Permalink | Comments (0)

SSRN Tax Professor Rankings

SSRN LogoSSRN has updated its monthly rankings of 944 American and international law school faculties and 3,000 law professors by (among other things) the number of paper downloads from the SSRN database.  Here is the new list (through September 1, 2014) of the Top 25 U.S. Tax Professors in two of the SSRN categories: all-time downloads and recent downloads (within the past 12 months):

 

 

All-Time

 

Recent

1

Reuven Avi-Yonah (Mich.)

40,041

Reuven Avi-Yonah (Mich.)

6669

2

Paul Caron (Pepperdine)

26,595

Ed Kleinbard (USC)

4504

3

Louis Kaplow (Harvard)

22,889

Richard Ainsworth (BU)

2695

4

D. Dharmapala (Chicago)

20,320

Paul Caron (Pepperdine) 

2627

5

Vic Fleischer (San Diego)

20,071

D. Dharmapala (Chicago)

2509

6

James Hines (Michigan)

19,825

Omri Marian (Florida)

1977

7

Ted Seto (Loyola-L.A.)

19,186

Robert Sitkoff (Harvard)

1949

8

Richard Kaplan (Illinois)

19.073

Richard Kaplan (Illinois)

1915

9

Katie Pratt (Loyola-L.A.)

16,168

Katie Pratt (Loyola-L.A.)

1801

10

Ed Kleinbard (USC)

15,859

Bridget Crawford (Pace)

1794

11

Dennis Ventry (UC-Davis)

15,397

Brad Borden (Brooklyn)

1588

12

Carter Bishop (Suffolk)

15,140

Jen Kowal (Loyola-L.A.)

1558

13

Jen Kowal (Loyola-L.A.)

14,418

Jeff Kwall (Loyola-Chicago)

1497

14

David Weisbach (Chicago)

14,359

Dick Harvey (Villanova)

1436

15

Chris Sanchirico (Penn)

14,253

Louis Kaplow (Harvard)

1434

16

Richard Ainsworth (BU)

14,065

James Hines (Michigan)

1407

17

Robert Sitkoff (Harvard)

13,974

Francine Lipman (UNLV)

1375

18

David Walker (BU)

13,935

Dan Shaviro (NYU)

1348

19

Francine Lipman (UNLV)

13,921

Ted Seto (Loyola-L.A.)

1335

20

Bridget Crawford (Pace)

13,883

David Gamage (UCBerkeley)

1313

21

Brad Borden (Brooklyn)

13,853

Vic Fleischer (San Diego)

1276

22

Herwig Schlunk (Vanderbilt)

12,507

Carter Bishop (Suffolk)

1251

23

Dan Shaviro (NYU)

12,101

David Weisbach (Chicago)

1186

24

Ed McCaffery (USC)

11,748

Gregg Polsky (North Carolina)

1167

25

Wendy Gerzog (Baltimore)

11,733

Chris Sanchirico (Penn)

1129

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

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September 16, 2014 in Scholarship, Tax, Tax Prof Rankings | Permalink | Comments (1)

Florida State Remembers Dan Markel

MarkelFlorida State is holding a memorial service today to remember Dan Markel, who was shot and killed on July 18. Speakers include faculty from Florida State and other law schools, current and former students, and Dan's sister. Dean Don Weidner will present the Alumni Class of 1966 Award to Dan’s Parents, Phil Markel and Ruth Markel. For the full program, see here

Dan's friends and family have set up a website, Help Us Tell Dan Markel’s Story.  For more memorial tributes to Dan, see here.  For updates on the investigation into Dan's murder, see here.

September 16, 2014 in Legal Education | Permalink | Comments (0)

U.S. Ranks 32nd (out of 34 OECD Countries) in International Tax Competitiveness

Tax Foundation, 2014 International Tax Competitiveness Index:

Tax Foundation logoThe Tax Foundation’s International Tax Competitiveness Index (ITCI) measures the degree to which the 34 OECD countries’ tax systems promote competitiveness through low tax burdens on business investment and neutrality through a well-structured tax code. The ITCI considers more than forty variables across five categories: Corporate Taxes, Consumption Taxes, Property Taxes, Individual Taxes, and International Tax Rules. The ITCI attempts to display not only which countries provide the best tax environment for investment but also the best tax environment to start and grow a business.

Tax Foundation

Wall Street Journal editorial, We're Number 32! A New Global Index Highlights the Harm From the U.S. Tax Code.:

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September 16, 2014 in Tax, Think Tank Reports | Permalink | Comments (7)

Applications Decline at All Five Georgia Law Schools

The IRS Scandal, Day 495

IRS Logo 2Wall Street Journal editorial:  Covering for the IRS:

The IRS targeting of conservative groups has now become a story about the cover-up. More than a year after the scandal became public, the most transparent Administration in history has done everything in its power to spin the story, stymie Congressional investigators and run out the clock.

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September 16, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Monday, September 15, 2014

Benzarti Presents How Taxing is Tax Filing? Today at UC-Berkeley

UC Berkeley Primary Logo Berkeley BlueYoussef Benzarti (UC-Berkeley, Department of Economics) presents How Taxing is Tax Filing? Leaving Money on the Table Because of Compliance Costs at UC-Berkeley today as part of the Robert D. Burch Center for Tax Policy and Public Finance Seminar:

I use a quasi-experimental design to estimate the burden of complying with the tax code. Employing a sample of US income tax returns, I observe the preferences of taxpayers over itemizing deductions or claiming the standard deduction. Treated taxpayers forgo $800 on average to avoid the cost of itemizing. A revealed preference argument implies that itemizing deductions is as painful as working more than 17 hours at one’s regular job. The amount of foregone benefits is larger for richer households, consistent with the fact that the value of time increases with income. I explore two explanations of the magnitude of the estimates. First, it could be due to an extreme aversion to filing taxes. Such aversion implies that itemizing deductions imposes an aggregate compliance cost of 0.24% of GDP and an extrapolation to filing federal taxes implies that the overall cost of compliance is 1.55% of GDP. Second, if taxpayers are time-inconsistent the revealed preference argument fails, introducing a wedge between foregone benefits and compliance costs. Being present-biased leads taxpayers to forego large benefits even when compliance costs are relatively small. I provide evidence of taxpayers being present-biased. Both explanations - whether driven by preferences or mistakes - suggest that the burden imposed on society by tax compliance is significantly larger than previously estimated. I discuss policy implications of the result.

September 15, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Shurtz Presents Long-Term Care and the Tax Code: A Feminist Perspective Today at Loyola-L.A.

ShurtzNancy Shurtz (Oregon) presents Long-Term Care and the Tax Code: A Feminist Perspective at Loyola-L.A. today as part of its Tax Policy Colloquium Series:

Long-term care is a feminist issue. Not only do women live longer but we suffer more from a multitude of degenerative physical and mental ailments that require supervised and concentrated care. We comprise 70% of the unpaid caregiver and over 90% of the paid caregiver. Because of low wages, interruptions in work for care of children and parents, lower pensions, women have fewer resources and thus may not adequately save or plan for expensive future long-term care expenses. Consequently, women are more likely to use social insurance (Medicare, Medicaid) and long term care insurance. From home care, adult care, continuing care to nursing home care, the tax code provides numerous but ineffective and inequitable subsidies. The tax system favors the purchase of long-term care insurance over savings, fails to value the unpaid caregiving services of family members, and inadequately supports the low-wage care worker. This paper suggests tax reform in addition to non tax reform. The Community Living Assistance Support and Services (CLASS) Act of the Affordable Care Act should be reinstated and funded and the Family Medical Leave Act should be modified and expanded. Eventually, the federal government will probably need to institute a Medicare tax on workers to fund the growing problem of financing and supporting elder care in America.

Vivian Wu (USC) is the commentator.

September 15, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (1)

NY Times: Student Loans Increasingly Burden the Elderly, Not Just the Young

New York Times:  Student Loan Debt Burdens More Than Just Young People, by Elizabeth Olson:

NY Fed[A]n estimated two million Americans age 60 and older ... are in debt from unpaid student loans, according to data from the Federal Reserve Bank of New York. Its August Household Debt and Credit Report said the number of aging Americans with outstanding student loans had almost tripled from about 700,000 in 2005, whether from long-ago loans for their own educations or more recent borrowing to pay for college degrees for family members.

The debt among older people is up substantially, to $43 billion from $8 billion in 2005, according to the report, which is based on data from Equifax, the credit reporting agency. As of July 31, money was being deducted from Social Security payments to almost 140,000 individuals to pay down their outstanding student loans, according to Treasury Department data. That is up from just under 38,000 people in 2004. Over the decade, the amounts withheld more than tripled, to nearly $101 million for the first seven months of this year from over $32 million in 2004.

While older debtors account for a small fraction of student loan borrowers, who have accumulated nearly $1 trillion in such debt, the effect of owing a constantly ballooning amount of debt but having a fixed income can be onerous, said Senator Bill Nelson, Democrat of Florida, chairman of the Senate Special Committee on Aging.

“Those in default on their loans can see their Social Security checks garnished, leaving them with retirement income that leaves them well below the poverty line,” he said at a committee hearing this week to examine the issue. “Some may think of student loan debt as a young person’s problem,” he said, “but, as it turns out, that is increasingly not the case.” ...

The Government Accountability Office warned this week about the growth of educational debt among seniors. It released a report that relied on different data from that used by the Federal Reserve Bank of New York, but nonetheless painted an ominous picture of lingering debt burden.

GAO

More than 80 percent of the outstanding balances are from seniors who financed their own education, the GAO report concluded, and only 18 percent were attributed to loans used to finance the studies of a spouse, child or grandchild. But the default rate for these loans is 31 percent — a rate that is double that of the default rate for loans taken out by borrowers between the ages of 25 and 49 years old, according to agency data.

(Hat Tip: Mike Talbert.)

September 15, 2014 in Legal Education | Permalink | Comments (1)

State Tax Fairness Rankings

Wallet Hub, 2014′s Most & Least Fair State Tax Systems:

Fair TaxAs a follow up to our 2014 Tax Fairness Survey which focused largely on federal tax policy, WalletHub has analyzed and ranked the 50 states based on the fairness of their state and local tax systems. To rank the states, Wallethub conducted a nationally representative online survey of 1,050 individuals to assess what Americans think a fair state and local tax system looks like. Our analysts then compared what Americans think is fair to data on the real structure of tax systems in all 50 states. We believe this is the first ever ranking of state and local tax fairness that matches representative data on what Americans think is fair with real data on the structure of state and local tax systems.

WalletHub

 

Most Fair Tax Systems

 

Least Fair Tax Systems

 

1

Montana

 

41

Tennessee 

 

2

Oregon

 

42

Texas 

 

3

South Carolina 

 

43

Arizona 

 

4

Delaware 

 

44

Mississippi 

 

5

Idaho 

 

45

Indiana 

 

6

Virginia 

 

46

Florida

 

7

Minnesota 

 

47

Illinois 

 

8

California 

 

48

Arkansas 

 

9

Maryland 

 

49

Hawaii 

 

10

Vermont 

 

50

Washington 

(Hat Tip: Bruce Bartlett.)

September 15, 2014 in Tax | Permalink | Comments (1)

Understanding Thomas Piketty and His Critics

PikettyThe Heritage Foundation: Understanding Thomas Piketty and His Critics, by Curtis S. Dubay & Salim Furth:

Thomas Piketty’s Capital in the Twenty-First Century is a treatise on how wealth inequality evolves in capitalistic economies. Piketty uses data stretching back to the 18th century to describe the historical evolution of wealth and inequality, proposes a model that matches the data, and uses that model to predict rising wealth inequality in the 21st century. He recommends punitive taxes on high incomes and wealth to prevent the scenario that he predicts. However, the best critiques of Piketty have shown that most of the links in his argument are broken. Piketty’s model does not match his data as well as he claims. His prediction of permanently rising wealth inequality rests on two implausible modeling assumptions. And his recommendation of punitive taxes is based on the glib assumption that capital accumulation is unimportant for wage growth, an assumption at odds with the data and even with his own model. As a result, almost nothing in Capital in the Twenty-First Century can be applied usefully to policymaking.

Heritage

September 15, 2014 in Book Club, Scholarship, Tax | Permalink | Comments (3)

Blanchard Takes Issue With Kleinbard's Call for Anti-Inversion Legislation

Tax Analysys Logo (2013) Kimberly S. Blanchard (Weil, Gotshal & Manges, New York), Blanchard Argues Against More Anti-Inversion Rules, 144 Tax Notes 1335 (Sept. 15, 2014):

I write to comment on Edward D. Kleinbard's recent article ['Competitiveness' Has Nothing to Do With It, 144 Tax Notes 1055 (Sept. 1, 2014)] on the subject of "inversions." Kleinbard is, as usual, erudite and funny, but all the erudition and humor in the universe cannot hide the hole in his argument.

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September 15, 2014 in Scholarship, Tax, Tax Analysts | Permalink | Comments (0)

NY Times: Jeers and Cheers Over Tax Inversions

New York Times:  Jeers and Cheers Over Tax Inversions, by Jeff Sommer:

[M]ost American consumers, investors and politicians have tacitly accepted that if a company is profitable, doesn’t violate the law and produces appealing products and services, it can operate wherever and however it likes. That’s why the furor over tax inversions is so intriguing. ...

Investors appear to like tax inversions. After Burger King said it would embark on one, its shares rose an astonishing 19.5 percent in a single day. No wonder that earlier this month, Newedge USA, a unit of Société Générale, said that “the rising tide of opposition in Washington, D.C., toward reincorporating for tax reasons may, in fact, accelerate deal-making as companies rush to complete conversions and other tax strategies before legislative changes.”

After years of a rising stock market and buoyant profits, much of them held abroad, American companies are engaging in a spree of mergers and acquisitions. And the United States is nearly alone among major industrialized nations in taxing — or, more realistically, trying to tax — all the worldwide income of corporations domiciled within its territory. Canada, Switzerland and nearly every place else tax only the income earned in their own territories. This makes tax planning much simpler. ...

[I]nversions may make it much easier to reduce American corporate taxes, Edward Kleinbard, a professor of law and business at the University of Southern California, said in a recent report. He opposes inversions, saying they are stripping the United States of its tax base. ... 

In a study of “the first wave of tax inversions” — those that took place before Congress tightened the rules in 2004 — [Elizabeth Chorvat, a visiting professor at the University of Illinois college of business] found that companies that moved their tax domiciles outperformed the overall stock market. It’s too early to tell whether the current wave will be similarly lucrative, she said, but corporate motivations are clear. While inversions prompt immediate tax bills for some shareholders, she said, they often end up being beneficial.

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September 15, 2014 in Tax | Permalink | Comments (0)

More Professors Read Mean Student Evaluations

Following up on my previous post on Professors Reading Mean Student Evaluations (in the spirit of Jimmy Kimmel’s Celebrities Read Mean Tweets):  Chronicle of Higher Education, In Cheeky Pushback, Colleges Razz Rate My Professors:

Mean TweetsThe Internet can be a nasty place, as academics know well from Rate My Professors. ... Many professors assail the website and anything that might give it credence. But at least some faculty members have recently concluded that the best way to challenge the site and its unsubstantiated ratings is to mock it without mercy. ...

Jimmy Kimmel, the late-night comedy host, popularized the shtick of having people read aloud the incredibly nasty things that other people write about them online, set to “Everybody Hurts,” the plaintive tune by REM.A good example from the spot’s debut is Andy Dick, the comedian. “Oh, this one’s actually sweet,” he reads. “‘Can it be my turn to punch Andy Dick until there’s bones in his stool?’”

As much as faculty members tend to loathe Rate My Professors, comments on the website rarely approach that level of venom. Many professors simply ignore the site, while others confess to girding themselves to peek at the comments, reasoning that even the rawest feedback can offer useful information.

(Click on YouTube button on bottom right to view video directly on YouTube to avoid interruption caused by blog's refresh rate.)

 

September 15, 2014 in Legal Education | Permalink | Comments (0)

The IRS Scandal, Day 494

IRS Logo 2The Hill:  Rand Paul Jokes He's 'Really Worried' About Anthony Weiner:

Sen. Rand Paul (R-Ky.) poked some fun at former Rep. Anthony Weiner (D-N.Y.) over his sexting scandal on Thursday.

“How many people here have a cellphone?” Paul asked an audience in New Hampshire, according to Breitbart News. “How many people think it’s none of the government’s damn business what you have on your cellphone?”

“I’ve been thinking that’s true,” Paul continued. “But I’m really, really worried about Anthony Weiner. Because you know he likes to take his selfies, and he’s had trouble finding a place to put them where the government can’t find them. So I’m thinking maybe Anthony Weiner should put his selfie in Lois Lerner’s emails.”

New York Post:  5 Lies That Have Shaped the Obama Presidency:

3. “Not even a smidgen of corruption.”

Obama said this in response to Bill O’Reilly’s question about the IRS scandal: “You’re saying no corruption?”

If there were not even a “smidgen of corruption,” as Obama insisted, it is hard to understand what outraged him, or at least seemed to, when news of the IRS scandal first broke. “It’s inexcusable, and Americans are right to be angry about it, and I am angry about it,” Obama said in May 2013. Obama routinely expressed anger when some new scandal erupted on his watch — IRS, the failed ObamaCare website, the VA scandal, Fast and Furious — but never before had he shoved a scandal down the memory hole so quickly.

And how could Obama know there wasn’t a smidgen of corruption before the investigation was even over? Perhaps because the administration knew that any proof of that was gone with deleted e-mails and destroyed hard drives?

The Wall Street Journal Report:

Paul Gigot: New developments in the ongoing investigation into the targeting of conservatives groups by the IRS, with the tax agency revealing last week that it lost the emails of five more employees, including a senior aide to Lois Lerner, the former official at the center of the scandal. That news comes amid fresh claims by House Oversight Committee chair, Darrell Issa, that Eric Holder's Justice Department is improperly collaborating with congressional Democrats in its own IRS probe. And this time, he says he has a phone call to prove it. ...

Kim Strassel: I think what you're seeing over the past week, and especially because of the latest revelation about the Justice Department--remember, the Justice Department is supposed to be investigating this IRS scandal. And instead, what we've got as an accumulation over the last few weeks is a bunch of evidence that suggests the IRS and Justice Department and other departments of the Obama administration instead appear to have been spending the past year doing everything they possibly can to impede congressional investigators in getting to the bottom of this affair.

So not just coordinating with Democrats. We now have news about Lois Lerner's BlackBerry being wiped. This happening after Congress had already starting investigating, after the Treasury inspector general had begun his investigation. You have the emails of other critical people in this scandal gone as well, at least five of them.

You have redactions in documents that are being sent so the investigators can't actually see the core conversations. And by the way, I should also note, the only reason we even know any of this is because of outside litigation, which has enlisted the help of the judicial branch, and judicial branch has been forcing the IRS and others to come clean with some stuff. That's why we're finding out they haven't been clean with congressional investigators.

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September 15, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

TaxProf Blog Weekend Roundup

Sunday, September 14, 2014

There Are Too Many Lawyers. What's One Law School Dean to Do?

San Francisco Weekly, Schooled, Indebt, Struggling & Broke: There Are Too Many Lawyers. What's One Law School Dean to Do?:

Wu (Frank)[UC-Hastings Dean Frank] Wu is not, by most measures, a humble person. But he's definitely conspicuous. ... Wu is, by turns, an eccentric, somewhat endearing, and often polarizing figure — colleagues describe him as a "straight-shooter" with an outsized personality; critics accuse him of bluster. If there's one thing everyone can agree on, though, it's that Wu has a daunting task before him. Four years ago, he took the reins at Hastings, a prestigious institution that's been walloped by the Great Recession.

Now, Wu has a glutted workforce and a lacerated state budget to contend with as he tests new ideas in one of the most brutal legal markets in the country, trying to reverse the university's steady downward swing. Though he says he doesn't have much faith in law schools, Wu believes he can make this one work.

As recently as 10 years ago, law school was the thing you did if you'd majored in literature or philosophy and couldn't figure out how to make money. A student who clawed his way to the top of the class had a good shot at a high-paying job. But when the economy crashed, so did the legal field. Harvard and Yale graduates weren't guaranteed job offers. Big firms were paying their new hires a reduced salary to go away for a year because there was no work for them. And when the year was up, there sometimes wasn't a job to come back to.

All those problems were exacerbated for students at UC Hastings, a 136-year-old public university near Civic Center that had always prided itself on being independent — it's one of the few in the country that doesn't have to answer to a larger institution — and on nurturing a lower-income, multicultural student body. The first law school in the University of California system, it's an ancient, venerable institution in a city that no longer cares about ancient, venerable institutions. ...

State budget cuts have hobbled the university; meanwhile, to Wu's horror, law schools keep opening their doors all around the country, minting new would-be lawyers who want to settle in San Francisco and will further squeeze the city's already small legal job market.

And though law schools are ubiquitous, the worthwhile, ABA-accredited ones — places like Stanford, Boalt Hall at UC Berkeley, and Hastings — are becoming prohibitively expensive while offering no guarantee of a job.

Hastings, then, despite its well-intentioned faculty and aggressive programming — what other school has a Startup Legal Garage that teaches students how to make it on their own as lawyers in Silicon Valley? — had, just by virtue of being a law school, unwittingly become part of the problem.

Wu is the first to acknowledge that he cannot change the market. But with a little ingenuity, he can change the law school model, making it more interdisciplinary and more pragmatically job-oriented, even if that means slashing enrollment or acknowledging that some students might have to reinvent themselves as small-businesspeople. Lawyering might be an old, feudal business, but law schools won't survive if they don't adapt to the new economy, Wu says. That's the only way to keep Hastings, or any of its peers, afloat.

But Wu's first task is to transform UC Hastings in the eyes of everyone else. Right now, the school is mired in a years-long rankings slump, according to U.S. News & World Report, the oft-reviled, oft-revered site of record that rates law schools. In 1992 it was 19th among the 175 accredited law schools nationwide; when Wu arrived in 2010, it was 39th. This year: 54th.

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September 14, 2014 in Legal Education | Permalink | Comments (1)

Truthdigger of the Week: David Cay Johnston

TruthdigTruthdigger of the Week: David Cay Johnston:

Every week the Truthdig editorial staff selects a Truthdigger of the Week, a group or person worthy of recognition for speaking truth to power, breaking the story or blowing the whistle. It is not a lifetime achievement award. Rather, we’re looking for newsmakers whose actions in a given week are worth celebrating.

Since Ronald Reagan and his successors in government began restructuring the tax code, American society has become increasingly unfair. Because of wide-ranging investigative reporters like David Cay Johnston, those of us with time and concern have the opportunity to learn a little about it.

A Pulitzer Prize-winning author who has covered economic and tax matters for major newspapers and other media over the last four decades, Johnston had the cover story in Newsweek magazine in late August and early September for two weeks running. The first account detailed the serial fabulism of widely respected late celebrity biographer C. David Heymann (as well as the complicity of his publisher Simon & Schuster and its parent company CBS). The second, which makes up the substance of this article, examines some of the ways in which Congress helps major corporations and investors reap huge profits by turning tax bills into zero-interest loans subsidized multiple times over by the American taxpayer, and includes a description of how such loopholes were used to help finance the recent tax-avoidance merger of fast food chains Tim Hortons of Canada and Burger King. ...

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September 14, 2014 in Tax | Permalink | Comments (5)

Top 5 Tax Paper Downloads

SSRN LogoThere is a bit of movement in this week's list of the Top 5 Recent Tax Paper Downloads on SSRN, with a new paper debuting on the list at #5.  The #1 paper is now #20 in all-time downloads among 10,292 tax papers:

  1. [2901 Downloads]  'Competitiveness' Has Nothing to Do with it, by Edward D. Kleinbard (USC)
  2. [326 Downloads]  2013 Developments in Connecticut Estate and Probate Law, by Jeffrey A. Cooper (Quinnipiac) & John R. Ivimey (Reid and Riege, Hartford)
  3. [205 Downloads]  The Futility of Tax Protester Arguments, by Allen D. Madison (South Dakota)
  4. [200 Downloads]  Public Pressure and Corporate Tax Behavior, by Scott Dyreng (Duke), Jeffrey Hoopes (Ohio State) & Jaron Wilde (Iowa)
  5. [159 Downloads]  The OECD'S Flawed and Dated Approach to Computer Servers Creating Permanent Establishments, by Monica Gianni (Florida)

September 14, 2014 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

The IRS Scandal, Day 493

IRS Logo 2The Blaze:  Lois Lerner Fallout: GOP Looks to Stop IRS Workers From Using Personal Email at Work:

The Republican House next week plans to take up three IRS-related bills, including one that would prevent all IRS officials from using their personal email while at work.

The issue has come up in the GOP investigation of former IRS employee Lois Lerner and her role in the IRS targeting scandal. Not only has the IRS said it lost more than two years’ worth of Lerner’s emails, but it has become clear that Lerner used her personal email for work purposes.

The legislation from Rep. Charles Boustany (R-La.) is just one simple line prohibiting this practice: “No officer or employee of the Internal Revenue Service may use a personal email account to conduct any official business of the government,” the bill reads.

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September 14, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Saturday, September 13, 2014

Where Are All the Law School Applicants?

Connecticut Law Tribune editorial, Where Are All the Law School Applicants?:

Nearly every law school in America is facing declining applications. Nationally, the level of applications has declined back to the level of 1976. It is clear that this drop is a problem for law schools, many of which opened or expanded over the intervening decades. What is less clear is the reason for the change, whether it is a good thing or a bad thing, and whether it is likely to reverse itself in the years ahead.

LSAC

What is the reason for this dramatic reversal? Conventional wisdom credits two principal factors. First, the legal job market suffered a combined cyclical and structural downturn in 2008. ... The second factor weighing against law school applications is the growing recognition of the burden of student debt. ...

Is this drop in law school enrollment a good or bad thing? One part is arguably good: many young people applied to law school because they had good grades and board scores and wanted to keep their options open, rather than truly thinking through that a legal career was right for them. Now, in contrast, anyone applying to law school has likely given serious thought to the decision.

But the decline is also unfortunate. Unfortunate for the young people who choose not to go to law school, because they are missing what can be incredibly rewarding career. Apart from the studies about the return on investment in a law degree, the career can bring satisfaction and opportunities for growth and career changes that few other paths provide.

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September 13, 2014 in Legal Education | Permalink | Comments (10)

Clark Redux: Recovery From Accountants for Disallowed Tax Shelter Constitutes Nontaxable Recovery of Capital

In Tax Court Logo 2Cosentino v. Commissioner, T.C. Memo. 2014-186 (Sept. 11, 2014), the Tax Court followed Clark v. Commissioner, 40 B.T.A. 333 (1939), Concord Instruments Corp. v. Commissioner, T.C. Memo. 1994-248, and Rev. Rul. 57-47, 1957-1 C.B. 23, in holding that $375,000 received by the taxpayers in settlement of a lawsuit against their accountants for advising them to purchase an abusive tax shelter constituted a return of capital and did not have to be included in income:

All of the damages that petitioners alleged in the complaint were damages that they sought in order to compensate themselves for the loss that they suffered because the accountants were negligent and breached their fiduciary duties to petitioners by erroneously advising them to use the tax-avoidance plan in order to dispose of the rental property. The $375,000 payment that petitioners received in settlement of the lawsuit was to compensate them for a loss that is similar to the respective losses in Clark, Concord Instruments, and Rev. Rul. 57-47.

Update:  Forbes, Client Sues Tax Advisor For Bad Advice: Is The Settlement Payment Tax-Free?, by Tony Nitti

September 13, 2014 in Tax | Permalink | Comments (0)

Craig Boise Named to Chair at Cleveland-Marshall

Press Release:

BoiseCleveland-Marshall College of Law is pleased to announce the appointment of Dean Craig M. Boise to the Joseph C. Hostetler – Baker & Hostetler Chair in Law.  The Chair in Law was created through generous gifts from John D. Drinko, a former managing partner of the firm, and other donors, and is the first chaired professorship created at Cleveland-Marshall College of Law.

Hewitt B. Shaw, Managing Partner of BakerHostetler’s Cleveland office, said “BakerHostetler is honored to have our firm’s name closely identified with the innovative and progressive leadership demonstrated by Dean Boise.”

Dean Boise noted that BakerHostetler has been a strong supporter of Cleveland-Marshall over the years, having previously underwritten visiting professors, named professors, annual lectures, and student scholarships. “We are grateful for BakerHostetler’s many generous contributions to the law school, and I am honored to be connected to the long tradition of excellence and innovation at the firm through the Chair in Law.”

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September 13, 2014 in Legal Education, Tax, Tax Prof Moves | Permalink | Comments (0)

The IRS Scandal, Day 492

Details Emerge in Murder of Dan Markel

Markel[Continually Updated]  More details are emerging in the July 18 murder of Dan Markel, D’Alemberte Professor of Law at Florida State and founder of PrawfsBlawg, as the result of a shooting in his home:

I have collected links to the many tributes to Dan here.

Dan Markel Memorial Fund To Benefit His Sons, Benjamin Amichai Markel and Lincoln Jonah Markel:

Markel

September 13, 2014 in Legal Education | Permalink | Comments (3)

Friday, September 12, 2014

Gamage Presents Analyzing the Optimal Choice of Tax Instruments Today at UCLA

Gamage (2014)David Gamage (UC-Berkeley) presents The Case for Levying (all of) Labor-Income Taxes, Value-Added Taxes, Capital-Income Taxes, and Wealth Taxes: Applying a Framework for Analyzing the Optimal Choice of Tax Instruments, 68 Tax L. Rev. ___ (2014), at UCLA today as part of its Faculty Workshop Series:

Economic analyses of taxation have largely focused on the problems of labor-to-leisure and saving-to-spending distortions. Based on these analyses, the prior literature has generally treated labor-income and consumption taxes as being essentially equivalent, and has also treated capital-income and wealth taxes as being essentially equivalent. Further, based on these analyses, the dominant view in the prior literature has been that neither capital income nor wealth should be taxed.

This Article expands on these prior analyses by incorporating a variety of tax-gaming responses and also administrative and compliance costs. By doing so, this Article argues that it is probably optimal for governments to levy some version of (all of) labor-income taxes, value-added taxes, capital-income taxes, and wealth taxes.

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September 12, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (0)