TaxProf Blog

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

Saturday, September 16, 2017

Should The United States Have A National Investment Authority?

On Tuesday, Boston College Law School welcomed Professor Saule Omarova (Cornell) as the first presenter in our inaugural Regulation and Markets Workshop Series. The paper (with Robert Hockett, also of Cornell) is entitled “Private Wealth and Public Goods: A Case for a National Investment Authority.” It’s available on SSRN.

In brief, the paper makes a two pronged contribution: First, a policy proposal for the creation of a National Investment Authority (NIA), a hybrid, public-private entity that directs private financial capital to fund long-term infrastructure and development projects; and second, a theoretical re-envisioning of what public goods are and how to provide them.

What is quite interesting from a tax and public finance perspective is that the NIA proposal aims to fill an institutional gap between the classic Treasury function and that of the central bank (the Fed). As Omarova and Hockett characterize it, the standard response to the public goods problem is to have Treasury, as the fiscal authority, collect tax payments (or borrow) and use the proceeds to finance public goods. However, they argue that political budget fights have rendered Treasury unable to advance large-scale and long-term public infrastructure investments. While the Fed has partially attempted to fill the gap and to encourage infrastructure investment using monetary policy tools, these tools are insufficient. As a result of the policy gap between the Treasury and Fed mandates, economic growth and development suffer.

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September 16, 2017 in Colloquia, Conferences, Scholarship, Tax | Permalink | Comments (0)

ABA Tax Section Fall CLE Meeting

CLE 2The ABA Tax Section concludes its three-day joint Fall CLE meeting with the ABA Real Property, Trust and Estate Law Section today in Austin, TX.  The full program is here.  Today's highlight is the keynote luncheqon address by  Michael J. Graetz (Columbia). Other Tax Profs with speaking roles include:

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September 16, 2017 in ABA Tax Section, Conferences, Tax | Permalink | Comments (0)

Texas A&M Names Jack Manhire Assistant Dean And Chief of Staff Of The I-School, And Assistant Vice President For Entrepreneurship And Economic Development

Manhire (2017)Jack Manhire, former Director of Program Development and Senior Lecturer in Law at the Texas A&M University School of Law in Fort Worth, is taking on new roles in College Station as Assistant Dean and Chief of Staff for Texas A&M’s new School of Innovation (“I-School”) and Assistant Vice President of Operations for Entrepreneurship and Economic Development.

Manhire’s positons prior to entering academe include National Chair of the Executive Education Program for the Treasury Executive Institute, Chief of Legal Analysis for the IRS Office of Professional Responsibility, Director of Technical Analysis & Guidance for the IRS Taxpayer Advocate Service, and Attorney-Advisor to the IRS National Taxpayer Advocate. Before entering full-time government service, he practiced law privately for over a decade and was Division Chief, Tax Law for the U.S. Coast Guard Auxiliary National Office.

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September 16, 2017 in Legal Education, Tax, Tax Prof Moves | Permalink | Comments (1)

Friday, September 15, 2017

Weekly SSRN Tax Article Review And Roundup

This week, Erin Scharff (Arizona State) reviews a new working paper by Leslie Book (Villanova), David Williams (Intuit) and Krista Holub (Intuit), Insights from Behavior Economics Can Improve Administration of the EITC.  

Scharff (2017)The problems of our dysfunctional Congress are legion. This dysfunction not only affect Congress’ ability to get the basic work of government done, but it shrinks the space available to have rational conversations about improving public policy. We see this in the debate over the Earned Income Tax Credit (EITC). The EITC retains bipartisan support. Nevertheless, it regularly comes under criticism for the high error rates in the program.

At the high end, the IRS estimates the overclaim percentage at a high of 39.1%, but even the IRS’s low estimate of 28.5% represents about $14 billion a year.  Conservative commentators use these estimates to argue the program is riddled with fraudLiberals, on the other hand, stress that the complexity of the program’s eligibility requirements makes inadvertent mistakes likely and note that methodological problems may lead the IRS to overstate the improper payment rate.  

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September 15, 2017 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)

Weekly Legal Education Roundup

Tax Policy In The Trump Administration

WaPo: The GOP's War On The EITC

EITCIn this op-ed in the Washington Post, columnist Catherine Rampell comments on a proposal in the Budget Committee Report 115-240 explaining the current budget legislation.  It's a proposal to tighten up processing of tax returns claiming the Earned Income Tax Credit (ETIC).  She writes:

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September 15, 2017 in Gov't Reports, News, Tax, Tax Policy in the Trump Administration, Tax Practice And Procedure | Permalink | Comments (7)

Emory Law Profs: Law Deans May Go To Jail For Submitting False Data To U.S. News

Morgan Cloud (Emory) & George Shepherd (Emory) have posted Law Deans In Jail, 77 Mo. L. Rev. 931 (2012), on SSRN:

A most unlikely collection of suspects — law schools, their deans, U.S. News & World Report and its employees — may have committed felonies by publishing false information as part of U.S. News' ranking of law schools. The possible federal felonies include mail and wire fraud, conspiracy, racketeering, and making false statements. Employees of law schools and U.S. News who committed these crimes can be punished as individuals, and under federal law the schools and U.S. News would likely be criminally liable for their agents' crimes.

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September 15, 2017 in Legal Education | Permalink | Comments (11)

Online Sales Tax Case Is Headed To The Supreme Court

Bloomberg Technology: Internet Tax Ruling Worth Billions Poised for Supreme Court Review, by Jef Feeley:

The South Dakota Supreme Court brought the question of whether online retailers should pay sales tax back into sharp focus.

The Mount Rushmore state’s highest court ruled Thursday that companies selling wares over the Internet can’t be forced to collect South Dakota’s 4.5 percent tax on purchases, laying the groundwork for a U.S. Supreme Court appeal that could change law across the country. A decision forcing online retailers to collect such taxes could be worth billions in revenue to state and local governments.The court backed an appeal by online retailers Overstock.comWayfair and NewEgg challenging a state law that required companies that do more than $100,000 worth of business in online sales in the state to collect sales taxes.

The law ran afoul of the U.S. Supreme Court’s 1992 decision in Quill Corp v. North Dakota, which forbade states from requiring retailers without a physical presence to collect sales tax. Justice Anthony Kennedy has suggested in later rulings that the court reconsider the decision.

Daniel Hemel (Chicago), The Common Law and the Commerce Clause

South Dakota’s highest court, in a unanimous decision released this morning, struck down a 2016 state law requiring out-of-state retailers to collect sales taxes on transactions with state residents.

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September 15, 2017 in New Cases, Tax | Permalink | Comments (0)

ABA Tax Section Fall CLE Meeting

CLE 2The ABA Tax Section continues its three-day joint Fall CLE meeting with the ABA Real Property, Trust and Estate Law Section today in Austin, TX.  The full program is here.  Today's highlight is the Teaching Taxation program on Best Practices in Drafting and Interpreting IRS Guidance:

Tax regulators communicate with taxpayers and their advisors through various means including regulations, notices, rulings, publications, and the IRS website. Not surprisingly, taxpayers and their advisors parse these communications in order to understand the applicable law and conduct their affairs accordingly. This panel will critically analyze two high profile modes of communication: examples in Treasury regulations and IRS public pronouncements. One key question taxpayers and their advisors face is how regulation examples should be interpreted, and how new legal content in examples should be reconciled with the broader regulatory and statutory scheme. Another major debate regarding IRS guidance concerns the trend and pressure for the IRS to use plain language in written communications with the public. Although “plain language” sounds compelling, there are downsides to this drafting approach. Panelists will discuss the benefits and risks associated with plain language explanations of tax law in these communications.

  • Terri Helge (Texas A&M) (moderator)
  • Joshua Blank (NYU)
  • Nina E. Olson (National Taxpayer Advocate)
  • Susan Morse (Texas)
  • Kerry Ryan (St. Louis)
  • Eric Solomon (EY, Washington, D.C.)

Other Tax Profs with speaking roles include:

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September 15, 2017 in ABA Tax Section, Conferences, Tax | Permalink | Comments (0)

TIGTA: 64% Of The IRS's Information Technology Is Beyond Its Useful Life

TIGTAThe Treasury Inspector General for Tax Administration has released Sixty-Four Percent of the Internal Revenue Service's Information Technology Hardware Infrastructure Is Beyond Its Useful Life (2017-20-051):

The overall objective of this review was to determine the efficiency and effectiveness of key ongoing or planned activities aimed at addressing the IRS operational challenge of replacing its aged hardware infrastructure.

While the Sustaining Infrastructure Program spends on average nearly 99.7 percent of its allocated budget each year, the IRS has not yet achieved its stated objective of reducing its aged information technology hardware to an acceptable level of 20 to 25 percent. In fact, this percentage has steadily increased from 40 percent at the start of Fiscal Year 2013 to 64 percent at the start of Fiscal Year 2017. The IRS estimates that the current replacement cost for its aged information technology hardware is approximately $430 million.

Figure 1

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September 15, 2017 in Gov't Reports, IRS News, Tax | Permalink | Comments (1)

Thursday, September 14, 2017

Net Tuition Trends By LSAT Category, 2010-2014: Net Tuition Rose In Highest (165+) And Lowest (<145) Bands, Fell In Middle (145-164) Bands

I have a new article entitled Net Tuition Trends by LSAT Category from 2010 to 2014 with Thoughts on Variable Return on Investment that is forthcoming in the Autumn issue of the Journal of Legal Education. I am very grateful for the research grant I received from Access Group (now AccessLex Institute) to support this project.  Here is the abstract:

The “macro” discussion of legal education highlights that law school is expensive. This general point fails to highlight the extent to which differences exist at a “micro” level due both to geography and LSAT profile. First, some regions of the country are more expensive than others. Second, where one is on the LSAT distribution profile influences the average net tuition because of scholarship patterns associated with institutional efforts to preserve or improve ranking. As a result, law school is not equally expensive across the entire LSAT distribution.

This article begins in Section I by briefly summarizing the geographic differences in tuition, which are not insignificant. Then, in Section II, this article briefly describes a dynamic net tuition model I developed for calculating net tuition trends by LSAT category and describes the results of that dynamic net tuition model. The results demonstrate that the variability of average net tuition by LSAT category increased significantly between 2010 and 2014 after accounting for inflation, with two LSAT categories seeing increases of 9.1% and 11.9% and four seeing decreases ranging from 2.8% to 13%. Section III looks at various outcome measures—specifically, bar passage rates, “bad news” employment outcomes, and imputed average first-year income—and demonstrates that, on average, the short-term return on investment varies significantly depending upon where someone is in the LSAT distribution. Section IV concludes with some thoughts on what this might mean for prospective law students and for law schools.

The dynamic net tuition model I developed is explained in detail in the Appendix to the article.  I have included below two of the figures from the article that summarize the data generated from my dynamic net tuition model.  
Thumbnail

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September 14, 2017 in Legal Education | Permalink | Comments (0)

State Bar Releases California Bar Exam Cut Score Study

California Bar ExamThe California State Bar has released Report to the Supreme Court of the State of California: Final Report on the 2017 California Bar Exam Standard Setting Study:

The report, which identifies options for a statistically reliable CBX cut score, includes findings from the Standard Setting Study, the second of four studies that the State Bar has undertaken to comprehensively explore the issues outlined by the Court

According to the psychometric literature, the purpose of any licensure examination like the CBX is to distinguish minimally competent candidates from those that could do harm to the public; the purpose is not to evaluate mastery of content, ensure employability, or evaluate training programs. Licensure exams are also not intended to be predictive of career success or possible future misconduct. With this doctrinal understanding of the purpose of a licensing exam, the attached report provides the Court with an analysis of the continued validity of the current CBX cut score of 1440, as well as the potential impact of the implementation of two alternate lower cut scores, 1414 and 1390.

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September 14, 2017 in Legal Education | Permalink | Comments (0)

Kleinbard: We Can’t Afford The Tax Reform Many Want (Tax Cuts), And Many Don't Want The Tax Reform We Need (Business Tax Overhaul)

Los Angeles Times op-ed:  A Business Tax System That's Both Fair and Competitive? It's Possible, by Edward Kleinbard (USC):

You can’t escape talk of tax reform. It remains the one demand that keeps the business community firmly engaged with President Trump. And in a crowded legislative calendar, it’s the one must-pass item that would constitute a really new policy initiative.

But we can’t afford the tax reform many of us want, and many of us don’t accept the importance of the tax reform we need.

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September 14, 2017 in Tax | Permalink | Comments (0)

Move Over California, Japan Has A 26% Bar Passage Rate

From Rob Anderson (Pepperdine):  Nikkei Asian Review, Fewer Prospective Lawyers Clearing the Bar in Japan:

A lower number of candidates passed the Japanese bar examination this year, new statistics show, with the tally barely topping the government's annual target of 1,500. Passers declined by 40 from 2016 to 1,543, according to Ministry of Justice figures out Tuesday.

Test takers numbered 5,967 this year, down 932. But the pass rate rose 2.91 percentage points to 25.86%.

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September 14, 2017 in Legal Education | Permalink | Comments (1)

When Sharia Law And The U.S. Tax Law Collide

Virginia La Torre Jeker, When Sharia and U.S. Tax Law Collide, 87 Tax Notes Int'l 787 (Aug. 21, 2017):

Sharia law impacts the US tax analysis of transactions arising in any Muslim-majority country or in any country when Muslim persons are involved in the transaction. Neither the US courts nor the Internal Revenue Service have provided guidance as to how the matter should be resolved when US tax and Sharia laws collide.

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September 14, 2017 in Scholarship, Tax | Permalink | Comments (2)

ABA Tax Section Fall CLE Meeting

CLE 2The ABA Tax Section kicks off its three-day joint Fall CLE meeting with the ABA Real Property, Trust and Estate Law Section today in Austin, TX.  The full program is here.  Tax Profs with speaking roles include:

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September 14, 2017 in ABA Tax Section, Conferences, Tax | Permalink | Comments (0)

NY Times: More On The Feds' Criminal Investigation Of Charlotte Law School

Charlotte Logo (2016)New York Times, Federal Inquiry of Charlotte Law School Is Disclosed by Suit:

Barbara Bernier arrived at Charlotte School of Law four years ago to teach constitutional and other law courses.

But what she found at the for-profit law school was different from her prior teaching experiences, so she quit her tenured post in August 2016. A few months earlier, she had filed a federal claim that the school and its owner, the InfiLaw Corporation, defrauded taxpayers of $285 million over a five-year period.

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September 14, 2017 in Legal Education | Permalink | Comments (0)

The IRS Scandal, Day 1589: The Better IRS Reform

IRS Logo 2

Wall Street Journal editorial, The Better IRS Reform:

The long saga of Lois Lerner is coming to a close. Ms. Lerner was the infamous Obama Administration cat’s paw at the Internal Revenue Service, which harassed conservative political groups in the Tea Party era. Now the Trump Justice Department has decided there is no cause to pursue criminal charges against Ms. Lerner, and Congressional Republicans are howling. ...

Republicans are furious. But this mess happened because the Obama Administration used federal bureaucracies for raw political purposes. If Mr. Sessions’s Justice Department has found no way to prove criminal intent beyond a reasonable doubt, Republicans could begin the road back to accountability by respecting that decision.

What House Republicans should do now is create a structure that will stop assaults by bureaucrats on political activity. They’ve been putting riders in spending bills to bar the IRS from imposing restrictions on nonprofit speech. But this thumbs-in-the-dike approach does nothing about powers that IRS functionaries already have over political activity.

The solution is to get the IRS out of the political arena by limiting its role to the most basic administrative task of giving initial approval to nonprofits. Transfer to the Federal Election Commission the job of deciding whether a nonprofit is abiding by the existing rules governing political spending. The FEC’s commissioners would decide if complaints against the political activities of nonprofits had merit.

Democrats will rebel because the design of the FEC makes it difficult to sic the commission on political enemies. That’s why they made the IRS their political enforcer. Legislators designed the FEC to prevent partisans from turning it into a political weapon.

It takes a majority vote among its six bipartisan FEC commissioners to proceed with a judgment. Commissioners are confirmed by the Senate and operate in the open. The status quo gives this job—and power—to the IRS’s unconfirmed, unseen federal bureaucrats.

Campaign-finance fights make Republicans nervous, but they’ve got a political self-interest in permanently transferring this job to the FEC. Once back in power, Democrats will mobilize a crackdown against their single biggest obsession—“dark money.” Meaning the conservatives who fund their opposition.

Lois Lerner’s IRS operation was the swamp at its worst. The GOP would do the country’s politics a favor by draining these bureaucrats of partisan political power.

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September 14, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

Wednesday, September 13, 2017

Diamond: Does The California State Bar Have A Race Problem?

California State Bar (2014)Stephen Diamond (Santa Clara), Does the California State Bar Have a Race Problem?:

A recent meeting of the State Bar’s Committee of Bar Examiners (CBE) suggests to me that the California Bar may have a problem with race. That is, its leaders do not understand or are not willing to accept that they are putting up a barrier to minorities who wish to practice law. The evidence of this potential problem is found in the tape of the hearing which you can view here as well as a report prepared by the Bar Association’s staff on the bar exam. ...

[W]hile we do not know why the cut score is so much higher than needed to meet the primary mandate of the CBE (protection of the public), we do know that by setting it at 144 the Bar has put up a wall over which minority law school graduates have difficulty climbing with the inevitable outcome: a disparate impact on those hopeful new law school graduates. ...

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September 13, 2017 in Legal Education | Permalink | Comments (12)

Herzig & Brunson: Let Prophets Be (Non) Profits

David Herzig (Valparaiso) & Samuel D. Brunson (Loyola-Chicago), Let Prophets Be (Non) Profits,  52 Wake Forest L. Rev. ___ (2017):

In this article, we take a step back and ask whether the Supreme Court’s application of the fundamental public policy rule as espoused in the Bob Jones case is the normatively correct position. In our analysis, we conclude that using fundamental public policy as a filter in granting tax exemption gets both tax and public policy wrong. Our conclusion is informed by the history of the role played by public charities espousing minority views. We believe that a legitimate space in society should exist and populated by nonprofits to both espouse popular and unpopular minority views. But it is also informed by tax policy: applying the fundamental public policy rule to qualification for tax exemption misunderstand how exemption fits into the corporate income tax.

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September 13, 2017 in Scholarship, Tax | Permalink | Comments (2)

California Accredited Law Schools Support Reducing Bar Exam Cut Score

California Bar ExamTaxProf Blog op-ed:  The California Supreme Court Should Lower The Bar Exam Cut Score, by Mitch Winick (President & Dean, Monterey College of Law):

The California Accredited Law Schools filed the attached letter brief with the California Supreme Court in support of an adjustment of the minimum passing score on the California Bar Exam from 1440 to 1390. 

The CALS joined with the following sources and resources that now identify or support 1390 as a valid interim or final cut score: the State Bar Standard Setting Study, the State Bar Board of Trustees, the State Bar Office of Research & Institutional Accountability, the Assembly Judiciary Committee staff and Committee Chair Mark Stone, the Law School Council, and 56 California law school deans (19 ABA, 13 CALS, and 14 Registered). Further, it is also important to note at the outset that a score of 1390 falls within the national norm (1330 to 1390) of the largest ten jurisdictions (other than California).

These findings support the CALS position that adjusting the cut score to 1390 can significantly moderate the disparate impact of the current disproportionately high minimum passing score of 1440.

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September 13, 2017 in Legal Education | Permalink | Comments (4)

Privatizing Tax Collection: The Idiocy Continues

Congress seems to be on an unceasing quest to undermine effective tax collection (for why I choose those words see my rant here).  In what can only be described as yet another boneheaded move,  Congress included a provision in the Fixing America’s Surface Transportation (FAST) Act in 2015 that required the Service to out-source collection work to private collection agencies (PCA's).

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September 13, 2017 in ABA Tax Section, Tax, Tax Practice And Procedure | Permalink | Comments (0)

Sixth Circuit Rejects Law Prof's Claim That 'Satanic' $666 Merit Pay Raise Was Retaliation For His Union Activities

Cleveland StateFollowing up on my previous posts (links below): Lifter v. Cleveland State University, Nos. 16-4084/4086 (6th Cir. Sept.12, 2017):

This is a First Amendment retaliation case. Married plaintiffs Sheldon Gelman and Jean Lifter were employees of the Cleveland-Marshall College of Law. When, after the 2008 financial crisis, the law school faced mounting pressure to trim class sizes and reduce enrollment, Gelman, a tenured professor, spearheaded a successful union-organizing campaign among the law faculty. The following spring, Gelman and several other pro-union faculty received a low and allegedly symbolic $666 merit raise. Just over a year later, Lifter’s employment was terminated. Both filed claims against the university and law-school dean Craig Boise under 42 U.S.C. § 1983, alleging that Gelman’s raise, his being deprived of committee appointments, and Lifter’s termination constituted retaliation for Gelman’s protected First Amendment conduct. The defendants filed a motion for summary judgment, which the court granted. The plaintiffs appeal the district court’s decision, and the defendants have filed a cross-appeal. For the following reasons, we affirm the district court as to Gelman, dismiss Lifter’s claim for lack of standing, and dismiss the defendants’ cross-appeal as moot. ...

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September 13, 2017 in Legal Education | Permalink | Comments (0)

SSRN Tax Professor Rankings

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

 

 

All-Time

 

Recent

1

Reuven Avi-Yonah (Mich.)

71,502

Reuven Avi-Yonah (Mich.)

12,589

2

Michael Simkovic (USC)

37,095

Lily Batchelder (NYU)

9108

3

Paul Caron (Pepperdine)

33,494

D. Dharmapala (Chicago)

3828

4

D. Dharmapala (Chicago)

31,694

Michael Simkovic (USC)

3519

5

Louis Kaplow (Harvard)

28,524

Richard Ainsworth (BU)

3307

6

Vic Fleischer (San Diego)

23,957

Michael Graetz (Columbia)

3086

7

Ed Kleinbard (USC)

23,528

David Gamage (Indiana)

2863

8

James Hines (Michigan)

23,124

Andy Grewal (Iowa)

2830

9

Richard Kaplan (Illinois)

22,216

David Weisbach (Chicago)

2572

10

Ted Seto (Loyola-L.A.)

22,199

Ed Kleinbard (USC)

2569

11

Richard Ainsworth (BU)

21,867

Daniel Shaviro (NYU)

2115

12

Katie Pratt (Loyola-L.A.)

20,482

Louis Kaplow (Harvard)

2089

13

David Weisbach (Chicago)

19,694

Darien Shanske (UC-Davis)

2018

14

Robert Sitkoff (Harvard)

19,183

William Byrnes (Texas A&M)

1816

15

Brad Borden (Brooklyn)

18,659

Steven Bank (UCLA)

1710

16

Carter Bishop (Suffolk)

18,312

Omri Marian (UC-Irvine)

1707

17

Chris Sanchirico (Penn)

17,996

Bridget Crawford (Pace)

1646

18

Francine Lipman (UNLV)

17,822

Jordan Barry (San Diego)

1625

19

Daniel Shaviro (NYU)

17,813

Jeffrey Kwall (Loyola-Chicago)

1580

20

Jen Kowal (Loyola-L.A.)

17,680

Paul Caron (Pepperdine)

1509

21

Bridget Crawford (Pace)

17,519

Stephen Shay (Harvard)

1502

22

Dennis Ventry (UC-Davis)

16,615

Cliff Fleming (BYU)

1455

23

David Walker (BU)

15,739

Brad Borden (Brooklyn)

1453

24

Steven Bank (UCLA)

15,512

Yariv Brauner (Florida)

1431

25

Gregg Polsky (Georgia)

14,227

Francine Lipman (UNLV)

1424

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 13, 2017 in Scholarship, Tax, Tax Prof Rankings | Permalink | Comments (0)

Baltimore Plans To Offer $2,500/Year Property Tax Discount For Police, Firefighters

Baltimore Sun, Baltimore Plans to Offer $2,500 a Year Property Tax Discount for Police and Firefighters:

Baltimore’s leaders plan to offer local police officers, firefighters and sheriff's deputies a property tax break of $2,500 a year if they own a home in the city.

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September 13, 2017 in Tax | Permalink | Comments (2)

Reforming Tax Administration

The current discussion about tax reform is focused on reforming substantive tax law and not tax administration.  Last April, however, a group of tax practitioner organizations put out a paper calling for tax administration reform.  You can find the proposal on the AICPA website here.

The nine practitioner organizations include the AICPA, the National Association of Enrolled Agents, and the National Association of Tax Professionals.  Notably absent from the list of practitioner groups are the main tax lawyer organization, the ABA Section on Taxation.

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September 13, 2017 in ABA Tax Section, IRS News, Tax, Tax Practice And Procedure | Permalink | Comments (1)

Tuesday, September 12, 2017

2018 U.S. News College Rankings

US NewsU.S. News & World Report today released its 2018 College Rankings. Here are the Top 25 National Universities and Liberal Arts Colleges (along with their 2015-2017 rankings):

2018

Rank

 

National Universities

2017

Rank

2016

Rank

2015

Rank

1

Princeton

1

1

1

2

Harvard

2

2

2

3

Chicago

3

3

4

3

Yale

3

3

3

5

Columbia

5

4

4

5

MIT

7

7

7

5

Stanford

5

4

4

8

Penn

8

9

9

9

Duke

8

8

8

10

Cal-Tech

12

10

10

11

Dartmouth

11

12

11

11

Johns Hopkins

10

10

12

11

Northwestern

12

12

13

14

Brown

14

14

16

14

Cornell

15

15

15

14

Rice

15

18

19

14

Vanderbilt

15

16

17

18

Notre Dame

15

18

18

18

Washington (St. Louis)

19

15

15

20

Georgetown

20

21

21

21

Emory

20

21

21

21

UC-Berkeley

20

20

20

21

UCLA

24

23

23

21

USC

23

22

25

25

Carnegie Mellon

24

23

25

25

Virginia

24

26

23

Pepperdine is ranked #46 (tied with Lehigh, Miami, UC-Davis, Villanova, and Wisconsin).

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September 12, 2017 | Permalink | Comments (2)

Shobe: Private Benefits In Public Offerings — Tax Receivable Agreements In IPOs

Gladriel Shobe (BYU), Private Benefits in Public Offerings: Tax Receivable Agreements in IPOs, 71 Vand. L. Rev. ___ (2017):

Historically, an initial public offering was a process whereby a company sold all of its underlying assets to the public. A new tax innovation, the “tax receivable agreement” (TRA), creates private tax benefits in public offerings by allowing pre-IPO owners to effectively keep valuable tax assets for themselves while selling the rest of the company to the public.

Ten years ago, TRAs were almost never used in IPOs. Today they have become commonplace, changing the landscape of the IPO market in ways that are likely to become even more pronounced in the future. This Article traces the history of various iterations of TRAs and shows that a new generation of more aggressive TRAs has recently developed. Although TRAs were historically used only for a small subset of companies with a certain tax profile, the new generation of innovative and aggressive TRAs can be used by virtually any company conducting an IPO, making it likely that TRAs will continue to spread across the IPO market.

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September 12, 2017 | Permalink | Comments (0)

Why American Workers Pay Twice As Much In Taxes As Wealthy Investors

Bloomberg Politics, Why American Workers Pay Twice as Much in Taxes as Wealthy Investors:

Let’s say you and I are neighbors. You’re an emergency room doctor, and I don’t work, thanks to a pile of money my grandparents left me.

You spend your days and nights stitching up gunshot wounds and helping children survive asthma attacks. I’ve gotten really good at World of Warcraft, winning EBay auctions, and frying shishito peppers to just the right crispiness.

Let’s also say we both report $300,000 in income to the Internal Revenue Service this year. Who pays more in taxes?

You do, by a lot. You owe the IRS about $38,500 more, assuming each of us pays the maximum with no special deductions. I also have more flexibility to lower my burden with tax planning strategies and other tricks, and I get to skip about $24,000 in payroll taxes that you and your employer must fork over each year.

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September 12, 2017 in Tax | Permalink | Comments (6)

University Of North Carolina Law School's Civil Rights Center Closes Following Board Of Governors Vote

North Carolina LogoFollowing up on my previous posts (links below):  Legal Times, Civil Rights Center at UNC Law School Shut Down:

University leaders on Friday voted to strip the Center for Civil Rights at the University of North Carolina School of Law of its ability to litigate cases.

The move caps a months-long fight between the predominately Republican board of governors for the University of North Carolina and supporters of the center, who say the board’s push was motivated by politics.

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September 12, 2017 in Legal Education | Permalink | Comments (2)

Politico: The U.S. News Rankings Fuel Inequality

U.S. News Logo (2018)Politico, How U.S. News College Rankings Promote Economic Inequality on Campus:

America’s universities are getting two report cards this year. The first, from the Equality of Opportunity Project, brought the shocking revelation that many top universities, including Princeton and Yale, admit more students from the top 1 percent of earners than the bottom 60 percent combined. The second, from U.S. News and World Report, is due on Tuesday — with Princeton and Yale among the contenders for the top spot in the annual rankings.

The two are related: A POLITICO review shows that the criteria used in the U.S. News rankings — a measure so closely followed in the academic world that some colleges have built them into strategic plans — create incentives for schools to favor wealthier students over less wealthy applicants.

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September 12, 2017 in Law School Rankings, Legal Education | Permalink | Comments (0)

How Perceived Influence Over Laws Affects Tax Evasion

Paul Mason (Baylor), Steven Utke (Connecticut) & Brian Williams (Indiana), Why Pay Our Fair Share? How Perceived Influence Over Laws Affects Tax Evasion:

We examine how the relation between taxpayers and their government affects tax evasion. Specifically, we examine how perceived influence over government policymaking affects taxpayers’ tax evasion decisions. We argue that taxpayers are less willing to comply with tax laws when they perceive the influence over their government to be unfavorable to them or the result of an unfair policymaking process.

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September 12, 2017 in Scholarship, Tax | Permalink | Comments (0)

Florida's 12 Law Schools Are Closed Through Wednesday

IrmaLegal Times, Florida's 12 Law Schools Closed Until Wednesday, At Least:

Florida's 12 law schools remained closed Monday as the remnants of Hurricane Irma churned northward out of the Sunshine State.

It was unlikely that any of those schools would reopen before Wednesday, and several have already announced class cancellations for the remainder of the week.

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September 12, 2017 in Legal Education | Permalink | Comments (0)

The IRS Scandal, Day 1587: Judicial Watch Says Trump Should Overrule His DOJ And Order A Full Review Of The IRS Scandal

IRS Logo 2

Town Hall, Judicial Watch: DOJ Giving Lerner a Pass is Bogus and Trump Should Order a Full Review of the Scandal:

Last week the Department of Justice, led by Attorney General Jeff Sessions, announced prosecutors will not pursue charges against former IRS official Lois Lerner. Lerner is infamous for her deliberate targeting of conservative tea party groups between 2010 and 2012 while leading the tax exempt department inside the agency.

The news was immediately met with outrage by House Ways and Means Chairman Kevin Brady, who said the failure to reopen the case against Lerner (which was closed without charges under the Obama administration) only proves that Washington bureaucrats are held to a much lower standard than every day Americans living outside the protective D.C. bubble. ...

Judicial Watch, which is still pursuing documents related to the IRS targeting scandal and has for years, proving Lerner was at the heart of the targeting, is buying none of it and calling on President Trump to intervene.

"I have zero confidence that the Justice Department did an adequate review of the IRS scandal. In fact, we’re still fighting the Justice Department and the IRS for records about this very scandal. Today’s [Friday's] decision comes as no surprise considering that the FBI collaborated with the IRS and is unlikely to investigate or prosecute itself," Judicial Watch President Tom Fitton released in a statement. "President Trump should order a complete review of the whole issue. Meanwhile, we await accountability for IRS Commissioner Koskinen, who still serves and should be drummed out of office."

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September 12, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (6)

Monday, September 11, 2017

Schmalbeck Presents Nonprofit Organizations And Political Campaigns At Northwestern

Schmalbeck (2016)Richard L. Schmalbeck (Duke) presented Nonprofit Organizations and Political Campaigns at Northwestern as part of its Advanced Topics in Taxation Workshop Series hosted by Sarah Lawsky:

This story involves three organizational forms, and two broad policy considerations. There are more than a score of different nonprofit organizational categories described in the IRC, but only three are relevant here: the organizations described in sections 501(c)(3), 501(c)(4), and 527. All are exempt from federal income taxes on any excess of revenue over expense that they might experience in any tax year. The first category (charitable organizations under section 501(c)(3)) allows use of deductible contributions to advance its programmatic ends, and also permits anonymous donations. The second (social welfare organizations under section 501(c)(4)) allows anonymous donations (but no deduction for contributions). The third (political organizations under section 527) is subject to rules that compel disclosure of the names of contributors and amounts of their contributions.

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September 11, 2017 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Brookings Symposium On Business Tax Reform

Contesting Tax Liability In A Collection Due Process Hearing

Broadly speaking, tax administration (as currently structured) consists of two main functions:  determining tax liability and collecting the tax liabilities so determined.   There is, however, some overlap because taxpayers sometimes have the opportunity during the tax collection process to get a re-determination of the underlying tax liability.  The main opportunity comes in the Collection Due Process (CDP) hearing.  This is an administrative hearing conducted by the IRS Office of Appeals and is subject to judicial review by the Tax Court.   Two recent Tax Court cases — Mohamed v. Commissioner (TC Sum. Op. 2017-69) and Bruce v. Commissioner (TC Memo. 2017-172) — illustrate just how narrow this opportunity is for taxpayers.  To me, they teach the take-home lesson that the best shot taxpayers have at getting the most favorable result is to respond early and often to tax notices.  Taxpayers who wait are the taxpayers who cry.  For a lesson that Mohamed teaches about tax return preparer penalties see Les Book's great post here.  More below the fold.

 

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September 11, 2017 in New Cases, Tax Practice And Procedure | Permalink | Comments (3)

 Low-Tax Texas Should Pay Its Fair Share Of Harvey Costs

Hurricane HarveyWashington Post op-ed:  Low-Tax Texas Should Pay Its Fair Share Of Harvey Costs, by Peter A. Barnes (Duke; Caplin & Drysdale) & H. David Rosenbloom (NYU; Caplin & Drysdale):

As the floodwaters from Hurricane Harvey recede, the humanitarian need for federal aid to help Texas and its residents is starkly evident. Lots of aid. Right now, or as soon as Congress can approve an appropriation.

Although members of Congress from New York and New Jersey complain about the hypocrisy of Texas requesting federal aid, given the fact that the Texas congressional delegation almost unanimously opposed the federal aid package for Hurricane Sandy in 2012, the grousing amounts to nothing. With the suffering in Texas visible on every news show, America is too good to withhold support as political payback.

But that doesn’t mean funding should be a gift. Not at all. The bulk of the federal money to help Texas residents rebuild their lives and communities should come in the form of a loan — perhaps a long-term loan at a favorable interest rate, but definitely a loan.

Here is why: Texas is avowedly a low-tax state.

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September 11, 2017 in Tax | Permalink | Comments (13)

Remembering September 11th At Pepperdine

Waves

Pepperdine to Honor 9/11 Victims with Waves of Flags Display:

From September 9 through September 25, Pepperdine’s Alumni Park will have on display the 10th annual Waves of Flags installation to commemorate the lives lost in the terror attacks of September 11, 2001.

Each year Waves of Flags features 2,977 full-size flags—2,887 American flags for each American life lost and 90 international flags representing the home countries of individuals from abroad who died in the 9/11 attacks.

The installation became a Pepperdine tradition in 2008 when the school’s College Republicans group organized to bring the tribute to the campus. ...

In addition to the Waves of Flags installation, Pepperdine is the permanent home of the Thomas E. Burnett, Jr., Heroes Garden, a public space for visitors to reflect and honor all those who live heroic lives, including namesake and Pepperdine alumnus Thomas Burnett (MBA ’95), a passenger on United Flight 93 who lost his life in the 9/11 attacks.

Heores Garden

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September 11, 2017 in Legal Education, Tax | Permalink | Comments (2)

Who Benefits From Corporate Tax Cuts?

FactCheck

FactCheck.org, Who Benefits From Corporate Tax Cut?:

In advocating for a corporate tax cut, Treasury Secretary Steven Mnuchin overstates the consensus when he says “most economists believe that over 70 percent of corporate taxes are paid for by the workers.”

In fact, who bears the brunt of corporate taxes — investors or labor —  is a matter of vigorous debate among economists who have studied it.

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September 11, 2017 | Permalink | Comments (0)

Law Schools Begin Classes In Fancy New, Upgraded Digs

Law.com, Law Schools Begin Classes in Fancy New, Upgraded Digs:

A new school year means a new look for several law schools.

Students at the University of South Carolina School of Law returned this fall to a brand new, $80 million building. The school is holding a dedication on Sept. 14 featuring U.S. Supreme Court Justice Samuel Alito.

Meanwhile, the University of Akron School of Law on Friday held a ribbon cutting Friday for its freshly renovated law campus, which cost $21 million and took two years to complete.

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September 11, 2017 in Legal Education | Permalink | Comments (0)

TaxProf Blog Weekend Roundup

Sunday, September 10, 2017

Bainbridge: Is Tax Avoidance Immoral? — A Catholic Perspective

Stephen Bainbridge (UCLA), Is Tax Avoidance Immoral? A Catholic Lay Perspective:

My friend and UCLA colleague Steven Bank [presented] a very interesting paper ... at a faculty colloquium, entitled When Did Tax Avoidance Become Respectable? ...

I'm neither a tax lawyer nor a theologian, but this got me to wondering what the Church taught on the subject. ... [A letter written by 11 heads of national Catholic Conferences says]:

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September 10, 2017 in Tax | Permalink | Comments (4)

Penn Law Students Try To Ban Amy Wax From Teaching Civil Procedure Due To Her Breakdown Of The Bourgeois Culture Op-Ed

WaxFollowing up on my previous posts:

National Lawyers Guild, Penn Law Chapter, Penn NLG Statement on Professor Amy Wax:

While we do not challenge Professor Wax’s right to express her views, we question whether it is appropriate for her to continue to teach a required first-year course. The Penn Law administration has long been aware that her bigoted views inevitably seep into her words and actions in the classroom and in private conversations with students. We call on the administration to consider more deeply the toll that this takes on students, particularly students of color and members of the LGBTQIA community, and to consider whether it is in the best interests of the school and its students for Professor Wax to continue to teach a required first-year class. Exposure to a diversity of viewpoints is an essential and valuable part of any educational experience, but no student should have to be exposed to bigotry or abuse in the classroom.

Since Professor Wax is, as usual, scheduled to teach Civil Procedure this fall, and we know that is unlikely to change, we offer ourselves as a resource for first-year students in Professor Wax’s class. 1Ls in Professor Wax’s class: whether you need someone just to listen, to help you figure out how to get through the semester, or to advocate on your behalf, Penn NLG has your back.

In 2015, Professor Wax received the University of Pennsylvania's Lindback Award for Distinguished Teaching (only three other Penn law professors have received the award in the past twenty years). 

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September 10, 2017 in Legal Education | Permalink | Comments (41)

Law Grad's GivnGo App Allows You To Round Up Your Purchases For Charity

GivnGo LogoOne of my former tax students, Arian Behboodi (J.D & M.B.A. 2017, Pepperdine), has created a very cool app, GivnGo.  The app allows a user to register a credit or debit card and the app rounds up your purchases to the next dollar and distributes the change to the charity or charities of your choice.  For example, if you spend $15.75, then the next dollar up is $16.00, so GivnGo distributes 25 cents to your charity. The app is available on iTunes.

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September 10, 2017 in Legal Education, Tax | Permalink | Comments (1)

The Top Five New Tax Papers

SSRN LogoThere is a bit of movement in this week's list of the Top 5 Recent Tax Paper Downloads, with a new #1 paper:

  1. [545 Downloads]  Federal Tax Procedure (2017 Practitioner Ed.), by John Townsend (Houston)
  2. [536 Downloads]  The Front Door Opens Wide for the Backdoor Roth IRA, by Philip Manns (Liberty) & Timothy Todd (Liberty)
  3. [268 Downloads]  Is Efficiency Biased?, by Zachary Liscow (Yale)
  4. [253 Downloads]  BEPS and European Union Law, by Sjoerd Douma (Leiden)
  5. [187 Downloads]  When Did Tax Avoidance Become Respectable?, by Steven Bank (UCLA)

September 10, 2017 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

Saturday, September 9, 2017

This Week's Ten Most Popular TaxProf Blog Posts

ABA Tax Section Releases 17th Annual Law Student Tax Challenge Problem

ABAThe ABA Tax Section has released the J.D. Problem (rules; entry form) and LL.M. Problem (rules; entry form) for the 17th 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 2018 Midyear Meeting, February 8-10, 2018 in San Diego, CA, 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 9, 2017 in ABA Tax Section, Legal Education, Tax, Teaching | Permalink | Comments (0)

Return On Investment: The Core Challenge For Legal Education As 100 Law Schools Fail Department Of Education's Debt-To-Earnings Standard

Martin Pritikin (Dean, Concord), Return on Investment: The Core Challenge for Legal Education and the Legal Profession:

The legal community is facing a myriad of serious challenges ― historically low law school enrollments and bar passage rates, exploding tuition costs and associated student debt and a stagnant job market ― that, if not addressed, will put it in peril. ...

The big problem is return on educational investment, as those who would most logically serve the middle market can ill afford to do so. Annual tuition is about $50,000 at top-tier private law schools, where many graduates land $180,000 starting salaries. But the tuition is roughly the same at so-called “fourth-tier” law schools, where those lucky enough to secure employment typically make between $60,000 and $80,000. There’s a name for this economic model: it’s called broken.

Consider this: of the 205 law schools accredited by the American Bar Association, 199 are exempt from Department of Education requirements to report graduates’ debt-to-earnings ratios. Why? Because they operate as not-for-profits. As reported by the ABA Journal on January 11, 2017, of the six for-profit schools that recently reported their data for the first time, two failed outright and three others were found to be in the “zone,” that is, at risk of failing. Yet, based on available data, if the not-for-profits were subject to the same debt-to-earnings test, it appears at least half of them ― 100 schools ― would have failed as well. ...

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September 9, 2017 in Legal Education | Permalink | Comments (1)