TaxProf Blog

Editor: Paul L. Caron
Pepperdine University School of Law

Wednesday, February 3, 2016

Rees-Jones Presents Attention Variation And Welfare: A Tax Salience Experiment Today At Penn

Rees-JonesAlex Rees-Jones (Wharton) presents Attention Variation and Welfare: Theory and Evidence from a Tax Salience Experiment at Pennsylvania today as part of its Center for Tax Law and Policy Seminar Series hosted by Chris Sanchirico and Reed Shuldiner:

A rapidly growing literature shows that consumers can be inattentive to complex or notfully-salient financial incentives. This literature typically estimates “the average mistake,” and uses representative agent models to analyze the economic implications. This paper shows, theoretically and empirically, that accounting for heterogeneity in mistakes is crucial in positive and normative analysis. Focusing on consumer underreaction to not-fully-salient sales taxes, we show theoretically that 1) individual differences in underreaction generate inefficiency in the resulting allocation of the taxed good, 2) the variation of underreaction across the income distribution affects the regressivity of the tax burden, and 3) the variation of underreaction across different tax rates affects the distortions to demand resulting from tax changes. To empirically assess the importance of these issues, we implement an online shopping experiment in which 3000 consumers—matching the U.S. adult population on key demographics—purchase common household products, facing tax rates that vary in size and salience.

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February 3, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (1)

Phillips Presents A Performative Theory Of Tax Policy Today At Toronto

Phillips 2Lisa Phillips (Osgoode Hall) presents Registered Savings Plans and the Making of Middle Class Canada: A Performative Theory of Tax Policy at Toronto today as part of its James Hausman Tax Law and Policy Workshop Series:

Campaigning politicians and elected governments of all parties strive to position themselves as defenders of the middle class. This is to be expected given the large proportion of the Canadian population that self-­‐identifies as middle class.2 Since the term itself lacks precision, it is a claim that can accommodate a wide range of policy proposals. Tax policy serves as a prime vehicle for making this appeal to middle class voters. Undoubtedly, any tax reform proposal can be critically examined to evaluate its likely distributional impacts and how well these map onto specific definitions of the middle class. However this paper attempts a different project. Drawing on the ideas of Judith Butler I analyze instead how tax policy produces middle class identity, through the very process of claiming to advance middle class interests. My case study for this purpose is the rise of tax-­‐assisted savings plans as a prominent feature of Canadian personal tax policy over the two decades from 1995 to 2015. I suggest that the presentation, design and language of registered savings plans have shaped the content of middle class identity, including the behaviours, expectations and aspirations that condition membership in this identity group.

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February 3, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

NY Times:  Despite Pledges, Tax Reform Remains An Elusive Goal

Tax Reform LogoNew York Times, Despite Pledges, Tax Reform Remains an Elusive Goal:

From a distance, tax reform reflects the shimmering frontier of American economic policy: bold plans from Republican presidential candidates, hints of interest from the White House and Hillary Clinton, bipartisan whispers in Congress.

Up close, however, the picture dims. For reasons both economic and political, the idea of a fundamental overhaul that closes loopholes, lowers rates and simplifies the tax code faces a deeply uncertain future regardless of who controls the White House and Congress in 2017.

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February 3, 2016 in Tax | Permalink | Comments (0)

Kahng:  The Taxation Of Women In Same-Sex Marriages

Lily Kahng (Seattle), The Not-So-Merry Wives of Windsor: The Taxation of Women in Same-Sex Marriages, 101 Cornell L. Rev.325 (2015):

In United States v. Windsor, the Supreme Court invalidated the Defense of Marriage Act definition of marriage as “between one man and one woman,” heralding its subsequent recognition, in Obergefell v. Hodges, of a constitutional right to same-sex marriage. Windsor cleared the way for same-sex couples to be treated as married under federal tax laws, and the Obama administration promptly announced that it would recognize same-sex marriages for tax purposes. Academics, policymakers, and activists lauded these developments as finally achieving tax equality between same- and different-sex married couples. This Article argues that the claimed tax equality of Windsor is illusory and that the only way to achieve actual equality is to eliminate taxation on the basis of marital status.

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February 3, 2016 in Scholarship, Tax | Permalink | Comments (1)

Mitt Romney As IRS Commissioner?

RomneyPolitico, Kasich :Romney or Bloomberg Could Fix IRS:

Spit-balling about how to fix the IRS, Ohio Gov. John Kasich said an audience member’s suggestion to tap Mitt Romney to do it would be a “really interesting suggestion.”

“A Mitt Romney or a Michael Bloomberg would be great,” he said, musing about a one-year appointment to turn it around.

“He went out and took care of the Olympics and he did that for free,” Kasich added, recalling Romney’s highly praised effort to turn around the struggling Salt Lake City Winter Olympics in 1999. “I’m going to send him an email tonight.”

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February 3, 2016 in IRS News, Political News, Tax | Permalink | Comments (10)

WSJ Wealth Management Report

Merritt:  Hippocrates And Socrates — Professional Obligations To Educate The Next Generation

Deborah Jones Merritt (Ohio State), Hippocrates and Socrates: Professional Obligations to Educate the Next Generation, 50 Wake Forest L. Rev. ___ (2015):

Do professionals have an ethical obligation to educate new members of their profession? The ancient Hippocratic oath recognized such a commitment, requiring all doctors “to give a share of precepts and oral instruction and all the other pupils who have signed the covenant.” Contemporary theories of professionalism point to the same result, identifying intergenerational education as an essential feature of professional status. Moral theory and economic policy, finally, underscore this outcome: In return for the exclusive right to practice a profession, established members of the profession must agree to share their knowledge, skills, and other expertise with newcomers.

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February 3, 2016 in Legal Education, Scholarship | Permalink | Comments (2)

ABA To Vote On Uniform Bar Exam

UBE (2016)Kyle McEntee (Law School Transparency), ABA House to Vote on Uniform Bar Exam:

Non-lawyers are encroaching on legal services traditionally offered by lawyers. Technology is changing how lawyers and clients think about value. Law schools have created a mismatch between the number of graduates and entry-level legal jobs. Throughout it all, regulators across the country are actively grappling (and griping) about how best to address these extraordinary circumstances.

While proposed actions or inactions cause sharp disagreements around the country about how to move the profession forward in the 21st century, one common-sense action shouldn’t: adopting the Uniform Bar Exam. Next Monday, the ABA’s House of Delegates will consider a resolution from the ABA’s Law Student Division that calls for all jurisdictions to adopt this portable exam. The House should support this measure, and all jurisdictions should adopt the UBE as quickly as possible.

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February 3, 2016 in Legal Education | Permalink | Comments (10)

Kane:  A Defense Of Source Rules In International Taxation, And Shaviro's Response

Mitchell Kane (NYU), A Defense of Source Rules in International Taxation, 32 Yale J. on Reg. 311 (2015):

The concept of "source" is central to the functioning of the current international tax system. To the extent the "source" of income is meant to reflect the spatial location of income; however, many academic commentators have come to regard the concept as completely incoherent. Further, that incoherence is viewed as a partial explanation of the perceived artificiality and frailties of current instantiations of source rules. In this Paper I make three basic claims. First, it is in fact coherent to conceive of the source concept in terms of the spatial location of income. Second, most of the problems with current instantiations of source rules can be understood as reflections of fundamental complications in designing an income tax in a closed economy and thus have nothing to do with spatial indeterminacy. This observation allows for incremental improvement to source rules in the same fashion as one can make incremental improvement to a closed economy income tax. Third, from an efficiency perspective, a novel and ambitious way to approach source rules would be to use such rules to segregate rents from non-rents and mobile income from non-mobile income. Traditionally, scholars have viewed the efficiency characteristics of a rents-only tax as an affirmative argument for cash flow taxes over income taxes. Holding the existence of the income tax constant, however, source rules could theoretically achieve an efficient result on this dimension. The practical implementation hurdles, though, are substantial.

Daniel N. Shaviro (NYU), Mitchell Kane's A Defense of Source Rules in International Taxation:

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February 3, 2016 in Scholarship, Tax | Permalink | Comments (0)

McIntyre & Simkovic:  Law Class Size Does Not Predict Changes In Financial Benefits Of Law School

Michael Simkovic (Seton Hall), Smaller or Larger Law Class Sizes Don’t Predict Changes in Financial Benefits of Law School:

One of the most surprising and controversial findings from Timing Law School was that changes in law school graduating class size do not predict changes in the boost to earnings from a law degree.* Many law professors, administrators, and critics believe that shrinking the supply of law graduates must surely improve their outcomes, because if supply goes down, then price—that is, earnings of law graduates—should go up.

In a new version of Timing Law School, Frank McIntyre and I explore our counterintuitive results more thoroughly. (The new analysis and discussion appear primarily in Part III.C. “Interpreting zero correlation for cohort size and earnings premium” on page 18-22 of the Feb. 1, 2016 draft and in Table 10 on the final page).

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February 3, 2016 in Legal Education, Scholarship | Permalink | Comments (2)

Weisbach:  Capital Gains Taxation And Corporate Investment

David A. Weisbach (Chicago), Capital Gains Taxation and Corporate Investment:

This study examines the interaction of dividend taxes and capital gains taxes on the sale of stock. Using a model of the new view of dividend taxation modified to incorporate realization-based capital gains and losses on stock, it shows that there are two interactions that effect the timing of dividend payments.

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February 3, 2016 in Scholarship, Tax | Permalink | Comments (0)

The IRS Scandal, Day 1000

1000 Days

The College Fix, The IRS Scandal, Day 1,000: Every Single Day For Nearly Three Years Prof Chronicles IRS Scandal:

A Pepperdine University School of Law professor has chronicled all the developments in the IRS scandal since Day One through a blog he tirelessly updates every day.

Every. Single. Day.

And today — Wednesday, Feb. 3 — marks Day 1,000 in tax law Professor Paul Caron’s apparently never-ending quest to keep tabs on the latest in the IRS scandal on his “TaxProf Blog.”

The feat itself is impressive in its size and scope, and something Caron said he could have never predicted when revelations that the agency targeted conservative groups came to light in May 2013.

“My goal for TaxProf Blog is to comprehensively cover the major tax and legal education issues of the day,” Caron said in an email to The College Fix. “So when the IRS scandal broke, I naturally covered it on the blog. After a week, it was clear that this would be a major, long-running story, so I decided to do a daily roundup of news of the IRS Scandal each day. I never dreamt it would still be going strong 1,000 days later.”

Caron’s dedication to the effort is evidenced by the fact that he posts updates to his blog on the scandal every day, including weekends and holidays: “There has always been something new to cover,” he said.

Over the years, Caron said perhaps one of the most troublesome aspects of the scandal is “the arrogance of IRS Commissioner John Koskinen and President Obama, and … the ineptitude of the House Republicans.”

“I set out my views in a USA Today op-ed on Day 369 and still think I pretty much nailed it,” Caron said. In that op-ed, he details the scandal’s major developments and calls for better media scrutiny and Congressional oversight.

Today, as the IRS scandal wanes from the public eye — especially in light of the 2016 presidential elections — questions on whether anyone will ever be held accountable for the unlawful actions remain. But it’s clear Americans are still upset over what went down.

When Caron polled his regular readers last year on whether he should continue the IRS news round up, he said the answer was overwhelmingly in the affirmative.

“Almost 1,000 of my readers voted in the poll, and 90 percent asked me to continue the daily coverage,” he said. “Several academics and practitioners have praised my coverage and stated that it will provide an important permanent resource when historians write about the scandal.” ...

The effort has not been without controversy in and of itself.

“I will say that I have received more professional flak about this than anything I have done in my 25 years as a tax professor,” Caron said in his email to The College Fix. “My goal throughout the 1,000 days has been to link to every single press report about the scandal – from both the right and the left. Because the right covers the scandal much more than the left, I have linked to many more stories from the right than from the left. Check out Day 883.”

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February 3, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (6)

The IRS Scandal, Days 901-1000

February 3, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Tuesday, February 2, 2016

Martin Presents The Structure Of American Income Tax Policy Preferences Today At NYU

MartinLucy Martin (North Carolina) presents The Structure of American Income Tax Policy Preferences (with Cameron Ballard-Rosa (North Carolina) & Kenneth F. Scheve (Stanford)) at NYU today as part of its Tax Policy Colloquium Series hosted by Daniel Shaviro and Chris Sanchirico:

In recent decades inequality in the United States has increased dramatically but policy responses in terms of redistribution have been limited. This is not easily explained by standard political economy theory, which predicts a positive relationship between inequality and redistribution. One set of explanations for this puzzle focuses on whether and why redistributive preferences are muted in the presence of high inequality. While much recent research has focused on citizens’ preferences over government spending, we argue that preferences over taxation are a central piece of this puzzle.

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February 2, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Viard Presents Fundamental Tax Reform: A Comparison Of Three Options Today At Georgetown

Viard (2016)Alan Viard (American Enterprise Institute) presents Fundamental Tax Reform: A Comparison of Three Options at Georgetown today as part of its Tax Law and Public Finance Workshop Series hosted by John Brooks and Itai Grinberg:

Three prominent tax reform options can significantly reduce the tax penalty on saving and investment while maintaining a progressive federal tax system: partially replacing the income tax system with a value added tax, fully replacing the income tax system with a Bradford X tax, or fully replacing it with a personal expenditure tax. This paper compares the options’ implications for economic growth, progressivity, transitional wealth effects, business taxation, public and private transfer payments, international transactions, and the non-business sector and the options’ political viability. The paper also outlines a hybrid option.

February 2, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Brooks:  Income-Based Repayment And The Public Financing Of Higher Education

John R. Brooks (Georgetown), Income-Driven Repayment and the Public Financing of Higher Education, 104 Geo. L.J. 229 (2016):

This Article makes two main contributions to the literature. First, it is, to my knowledge, the first article in the legal literature to systematically analyze this huge new entitlement benefit that will affect millions of people and hundreds of billions of dollars. Second, in framing income-driven repayment as a tax instrument, this Article shows that PAYE should be viewed as an integrated part of the public finance system, not merely as a loan program. This framework then provides the basis for a novel analysis of the effectiveness, equity, and economic efficiency of the program, and for several new policy recommendations to make PAYE more effective and equitable.

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February 2, 2016 in Legal Education, Scholarship | Permalink | Comments (2)

Dimick:  Should The Law Do Anything About Economic Inequality?

Matthew Dimick (SUNY-Buffalo), Should the Law Do Anything About Economic Inequality?:

What should be done about rising income and wealth inequality? Should the design and adoption of legal rules take into account their effects on the distribution of income and wealth? Or should the tax-and-transfer system be the exclusive means to address concerns about inequality? A widely-held view argues for the latter: only the tax system, and not the legal system, should be used to redistribute income. While this argument comes in a variety of normative arguments and has support across the political spectrum, there is also a well-known law-and-economics version. This argument, known as the “double-distortion” argument, is simply stated. Legal rules that redistribute income only add to the economic distortions that are already present in the tax system. It would therefore be better for everyone, and especially the poor, to instead adopt an efficient, nonredistributive legal rule, and increase redistribution through the tax system.

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February 2, 2016 in Scholarship, Tax | Permalink | Comments (1)

Obama, Ryan See Potential For Tax Policy Compromise

EITC Logo (2014)Wall Street Journal, Obama, Ryan See Potential for a Tax-Policy Compromise:

President Barack Obama and House Speaker Paul Ryan have the rare makings of a tax-policy compromise: Both want to expand a poverty-fighting tool some analysts say could draw millions of Americans into the workforce.

Set to meet formally Tuesday for the first time since Mr. Ryan became speaker, the two hold widely divergent views on taxes, spending and government’s role in American life. But both support a plan to increase the earned income tax credit, or EITC, to include childless workers.

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February 2, 2016 in Tax | Permalink | Comments (1)

Harvard Transfers Don’t Spell Financial Trouble, But Several Law Schools’ Bond Ratings Do

Harvard Law School Logo (2014)Bloomberg BNA:  Here’s How the Law School Crisis Is Hitting Harvard, by Kyle McEntee (Law School Transparency):

Is the law school crisis affecting Harvard? Probably not. The school did choose to take 55 transfer students last year, the fourth largest transfer class in the country. In the prior four years the school took between 30 and 34 transfers each year. Its higher than usual acceptance of transfers has fueled speculation that it was compensating for an original applicant pool that wasn’t strong enough. Whether that’s so or not, several indicators that may show a school faces financial duress have each remained steady at HLS between 2011 and 2015. ...

Three law schools face heightened cash monitoring from the federal government.
New York Law School’s bonds barely make investment grade.
California Western sees its bond-rating plummet.

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February 2, 2016 in Legal Education | Permalink | Comments (0)

When Will Donald Trump Release His Tax Returns?

TrumpFollowing up on last week's post, Mitt Romney Calls On Presidential Candidates To Release Tax Returns: Wonder Whose Yuuuge Tax Returns He Has in Mind:  Wall Street Journal, When Will Donald Trump’s Tax Returns Be Public?:

Most of the 2016 candidates have made their tax returns public. When will the GOP front-runner, Donald Trump, release his?

Mr. Trump has said for months that he intends to release his returns. He is cagey, however, about a firm date. In October, he told ABC’s George Stephanopoulos that he would release them “when we find out the true story on Hillary’s e-mails.”

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February 2, 2016 in Political News, Tax | Permalink | Comments (0)

More On The Discrimination Against Conservative/Libertarian Law Profs Even Though They Are More Productive Scholars Than Liberal Law Profs

Following up on my previous posts:

The Volokh Conspiracy (Washington Post):  Revisiting Whether Conservative and Libertarian Law Professors Are More Productive Than Their Peers, by Jonathan H. Adler (Case Western):

Phillips’s paper prompted substantial discussion about his findings and their potential implications. Below is Phillips’s response:

The dearth of conservative/libertarian law professors is often attributed to one of four main explanations, what I call the Greed, Interest, Brainpower, and Discrimination Hypotheses. ...

Comments have centered around three main points. First, the data are also consistent with one of the self-selection hypotheses. Second, conservatives/libertarians are more likely to get clerkships, undermining the findings some. Third, annual publication and citation rates aren’t good measures of law professor ability or success, and if they were, wouldn’t the market correct any discrimination? Let me address each in turn. ...

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February 2, 2016 | Permalink | Comments (1)

GOP Candidates Seek Repeal Of State & Local Tax Deduction That Benefits Blue States Most

WSJWall Street Journal, GOP Candidates Seek End to a Federal Tax Break That Benefits Blue States Most:

The major tax break that Republican presidential candidates are most eager to ax happens to be one that disproportionately benefits Democratic states.

Repealing the federal deduction for state and local taxes would make 23.6% of U.S. households pay an average of $2,348 more to the Internal Revenue Service for 2016. But those costs—almost $1.3 trillion over a decade—aren’t evenly spread, according to new estimates from two researchers at the Urban Institute, a think tank.

Ranked by the average potential tax increase, the top 13 states (including Washington, D.C.), as well as 16 of the top 17, voted twice for President Barack Obama. None of the four early-voting states that will winnow the Republican primary field—Iowa, New Hampshire, Nevada and South Carolina—is higher than 26th. And nearly one-third of the cost would be paid by residents of California and New York, two solidly Democratic states. ...

“After you’re told that your tax plan will increase the deficit by trillions of dollars, you need something to be on the chopping block,” said the Urban Institute’s Kim Rueben, who analyzed the deduction in a draft research paper with Frank Sammartino. “And the fact that more of the [tax] benefits go to blue states rather than red states, I think, feeds into this.” ...

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February 2, 2016 in Political News, Tax | Permalink | Comments (14)

University Of California Faculty Object To Monitoring Of Their Emails, Website Visits

University of California (2015)San Francisco Chronicle, Cal Professors Fear UC Bosses Will Snoop on Them:

UC Berkeley faculty members are buzzing over news that University of California President Janet Napolitano ordered the installation of computer hardware capable of monitoring all e-mails going in and out of the UC system.

“The intrusive device is capable of capturing and analyzing all network traffic to and from the Berkeley campus and has enough local storage to save over 30 days of all this data,” Ethan Ligon, one of six members of the school’s Senate-Administration Joint Committee on Campus Information Technology, wrote in an e-mail Thursday to fellow faculty members.

Information that the hardware gathers, Ligon wrote, “can be presumed to include your e-mail, all the websites you visit, all the data you receive from off campus or data you send off campus.”

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February 2, 2016 in Legal Education | Permalink | Comments (15)

House Holds Hearing Today On Delivering Growth And Opportunity For All Americans

House LogoThe House Ways & Means Committee holds a hearing today on Reaching America’s Potential: Delivering Growth and Opportunity for All Americans:

February 2, 2016 in Congressional News, Tax | Permalink | Comments (0)

Tax Prof Tour And Dinner At ABA Tax Section Midyear Meeting In Los Angeles

Here is a photo of Tax Profs at the Frank Gehry Tour of Loyola-L.A. Law School and Dinner on January 29 (during the  ABA Tax Section Midyear meeting in Los Angeles):

(Photo credit: Brian Costello)

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February 2, 2016 in ABA Tax Section, Tax | Permalink | Comments (0)

The IRS Scandal, Day 999

IRS Logo 2Albuquerque Journal op-ed: IRS Continues to Target Conservative Groups, by Rick Harbaugh (Albuquerque Tea Party):

Lois Lerner, the former head of the IRS, was forced into early retirement because of this issue. Holly Paz also disappeared off the rolls of the IRS over this issue.

The current head of the IRS is under fire for lying that this issue has been resolved.

Why am I bringing up ancient history about the IRS targeting of conservative groups several years ago? After all, those issues have been resolved. Right?

Not hardly!

This month marks the sixth anniversary of the Albuquerque Tea Party’s application to the IRS for a 501c4 tax exempt status. To date, the IRS has still not responded to that application – even though the current head of the IRS has said that the issue has been resolved. Not so. ...

It is way past time for this issue to be addressed. The IRS needs to give a thumbs up or a thumbs down on our request.

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February 2, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Monday, February 1, 2016

Kleinbard Presents The New Political Economy Of Capital Income Taxation Today At UC-Irvine

Kleinbard (2015)Edward Kleinbard (USC) presents The New Political Economy of Capital Income Taxation at UC-Irvine today as part of its Tax Law and Policy Colloquium Series hosted by Omri Marian:

The standard view in the U.S. tax law academy remains that capital income taxation is both a poor idea in theory and completely infeasible in practice. But this ignores the first-order importance of political economy issues in the design of tax instruments. Taxing capital income is responsive to important political economy exigencies confronting the United States, including substantial tax revenue shortfalls relative to realistic government spending targets, increasing income and wealth inequality at the top end of distributions, and the surprising persistence of dynastic wealth.

More surprisingly, a flat-rate (proportional) income tax on capital has attractive theoretical and political economy properties that can be harnessed in actual tax instrument design.

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February 1, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (1)

Judging The Presidential Candidates' Tax Plans

MooreStephen Moore (Cato Institute), Judging the Tax Plans:

With the first real votes being cast in the presidential race on Monday, this is an opportune moment to do some last-minute comparison shopping on the candidate tax reform plans. On this issue there’s a lot to cheer about. All the Republican candidates have crafted plans that would slash tax rates for everyone and most would vastly simplify the thousands of pages of IRS tax code too.

The chart shows how low tax rates would go under the Republican plans. ...

All of this contrasts sharply with the two Democratic candidate plans.

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February 1, 2016 in Political News, Tax | Permalink | Comments (0)

David Bowie: A Tax Oddity

BowieNew York Post Page Six, David Bowie Leaves Iman Roughly Half of His Fortune:

David Bowie’s dying wish was to have his ashes scattered on Bali — in line with the island’s Buddhist customs — and his riches sprinkled on his wife and kids, according to his will filed Friday in Manhattan court. ...

Bowie also directed that his property and money be divided among his model wife Iman, his two children, Duncan Jones and Lexi Zahra Jones, a personal assistant and a former nanny.

The music icon was worth around $100 million when he died this month of cancer at 69, according to court papers.

Iman will receive roughly half of his fortune, plus the couple’s apartment on Lafayette Street in Manhattan. ...

By rock standards, David Bowie was a real tax oddity — because he was so savvy with his money.

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February 1, 2016 in Celebrity Tax Lore, Tax | Permalink | Comments (1)

Google And The Search For International Tax Reform

GoogleThe Economist, Going After Google:

Britain’s Tax Men Struck a Poor Deal. But the Real Problem Lies With Flawed International Corporate-Tax Rules

It was meant to win plaudits for clawing more money out of cunning, tax-shy multinationals. Instead, a deal between Google and the British government, in which the tech giant will pay £130m ($185m) in back taxes covering a ten-year period, has attracted only opprobrium.

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February 1, 2016 in Tax | Permalink | Comments (0)

For Most Law Students, Will The Value Of A Law Degree Exceed Its Cost?

Above the Law, For Most Law Students, Will The Value Of A Law Degree Exceed Its Cost?:

If you have a law degree, do you believe attending law school was worth it? If you are currently in law school, are you happy with your decision? Do you believe that for most law school graduates, the value of a law degree will exceed its cost by “hundreds of thousands of dollars”?

February 1, 2016 in Legal Education | Permalink | Comments (28)

Clinton (47%), Sanders (54%) Propose Highest Capital Gain Tax Rates (Now 24%) In History

Spring 2016 Law Review Article Submission Guide

SubmissionsNancy Levit (UMKC) & Allen Rostron (UMKC) have updated their incredibly useful document, which contains two charts for the Spring 2016 submission season covering 204 law reviews.

The first chart (pp. 1-51) contains information gathered from the journals’ websites on:

  • Methods for submitting an article (such as by e-mail, ExpressO, regular mail, Scholastica, or Twitter)
  • Any special formatting requirements
  • How to request an expedited review
  • How to withdraw an article after it has been accepted for publication elsewhere

The second chart (pp. 52-58) contains the ranking of the law reviews and their schools under six measures:

  • U.S. News: Overall Rank
  • U.S. News: Peer Reputation Rating
  • U.S. News: Judge/Lawyer Reputation Rating
  • Washington & Lee Citation Ranking
  • Washington & Lee Impact Factor
  • Washington & Lee Combined Rating

They also have posted a list of links to the submissions information on each law journal’s website. Nancy notes three highlights in this updated document:

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February 1, 2016 in Legal Education, Scholarship | Permalink | Comments (3)

Moody's Withdraws Vermont Law School's Ba1 Bond Rating

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February 1, 2016 in About This Blog, Legal Education, Tax | Permalink | Comments (0)

The IRS Scandal, Day 998

IRS Logo 2Peter J. Reilly (Forbes), NorCal Tea Party Patriots V IRS - Grassroots Or Astroturf?:

The news about a preliminary victory against the IRS in a suit by not-for-profits broke last week making it Day 986 of the TaxProf’s IRS Scandal.  I didn’t make it into my inbox till last weekend, because the ruling required redaction. Judge Susan Dlott of the United States District for the Southern Division of Ohio ruled in NorCal Tea Party Patriots, et al v IRS that the various groups that believe they were targeted by the IRS will be recognized as a class.

Beginning in 2010, Plaintiffs applied to the IRS for exemption from federal taxation pursuant to the Internal Revenue Code, 26 U.S.C. §§ 501(c)(3) and/or 501(c)(4). Plaintiffs allege that the IRS targeted them and other dissenting groups by segregating their tax-exemption applications because their names included terms such as “Tea Party,” “Patriots,” or “9/12 Project” or because their focus included issues such as government spending. Plaintiffs allege that the IRS subjected the applications from these dissenting groups to delays and increased scrutiny. They further allege, with respect to a certain subset of dissenting groups, that the IRS requested and then inspected information not relevant to the tax-exemption application process. ...

The hundreds of Tea Party and the like groups that were harmed by the IRS slow walking their applications and aggravating them with unnecessary questions are not holding bake sales and spaghetti suppers to pay for lawyers to vindicate them.  Rather a group whose exempt status was not challenged is bankrolling the effort.

As noted the litigation is being funded by Citizens For Self-Governance.  The suit gets prominent play on CSG’s website. One of the things that flashes up is that CSG filed the only class action lawsuit against the federal government to defend the law-abiding citizens who were harassed by the IRS. ...

Sourcewatch working in the opposite direction (from disclosures of donors) has identified a few of the larger donors including $2.5 million from the Vanguard Charitable Endowment Program (a donor advised fund) and $691,916.16 from DonorsTrust. DonorsTrust is essentially a donor advised fund dedicated to supporting conservative causes “… to insure the intent of donors who are dedicated to the ideals of limited government, personal responsibility, and free enterprise.”

So CSG is starting to looking like part of the Kochtopus.  Board member, Eric O’Keefe is reputed to have Koch connections. ...

It seems that CSG is embarking on a program of extremely radical change.  The promoters of the IRS scandal narrative have been talking about the Obama administration, somehow through Bush era appointees, weaponizing the IRS.  A counter argument might be that groups like ALEC and CSG are part of an effort to weaponize philanthropy and they will brook no interference.

At least for the upcoming election cycle, they have pretty well defanged the IRS, but it may be that this litigation is meant to be part of stomping on it and grinding it into the dust.

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February 1, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (4)

TaxProf Blog Weekend Roundup

Sunday, January 31, 2016

ABA Proposal To Lift Ban On Academic Credit For Paid Externships Draws Heavy Faculty Opposition

ABA Logo 2ABA Journal, Proposal to Lift Ban on Academic Credit for Paid Externships Draws Heavy Opposition:

A proposed change in the law school accreditation standards that would lift the ban on students receiving academic credit for paid externships has drawn a lot of comment—and much of the comment is in opposition to lifting the ban.

Under the current standards, law students are barred from receiving both credit and pay for an externship. But the governing council of the ABA Section of Legal Education and Admissions to the Bar has approved for notice and comment a proposal that would eliminate the ban.

That proposal is just one of four proposed changes in the standards (PDF) that the council has posted for notice and comment. But it is the one that has drawn the lion’s share (PDF) of comments. And most of those comments have been negative.

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January 31, 2016 in Legal Education | Permalink | Comments (5)

The 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, with a new #1 paper and new papers debuting on the list at #2 and #5:

  1. [332 Downloads]  Conservation Easements and the Valuation Conundrum, by Nancy McLaughlin (Utah)
  2. [213 Downloads]  Uncle Sam Wants … Who? A Global Perspective on Citizenship Taxation, by Allison Christians (McGill)
  3. [170 Downloads]  Profit Shifting Of U.S. Multinationals, by Tim Dowd (Joint Committee on Taxation), Paul Landefeld (Joint Committee on Taxation) & Anne Moore (Joint Committee on Taxation)
  4. [162 Downloads]  Are Corporate Inversions Good for Shareholders?, by Anton Babkin (Wisconsin), Brent Glover (Carnegie Mellon) & Oliver Levine (Wisconsin)
  5. [141 Downloads]  Crummey Delivers Another Knockout Punch To The IRS, by Phyllis C. Taite (Florida A&M)

January 31, 2016 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

Religiosity And Tax Compliance

Kadir Nagac (Zirve University, Department of Economics), Religiosity and Tax Compliance:

The intention of this paper is to analyze religiosity as a factor that potentially affects tax compliance. Studies in the 90s have shown that the puzzle of tax compliance is "why so many individuals pay their taxes" and not "why people evade taxes". It has been noted that compliance cannot be explained entirely by the level of enforcement (Graetz and Wilde, 1985; Efflers, 1991). Countries set the levels of audit and penalty so low that most individuals would evade taxes, if they were rational, because it is unlikely that cheaters will be caught and penalized. Nevertheless, a high degree of compliance is observed. Therefore, studies that analyze a variety of factors other than detection and punishment are need. Religiosity can play an important role in determining one's tax compliance decision. I use religious adherence data from the American Religious Data Archive and reported income data from IRS to analyze independent effects of church adherence rates on tax compliance in the United States at the county-level.

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January 31, 2016 in Scholarship, Tax | Permalink | Comments (0)

The IRS Scandal, Day 997

IRS Logo 2The Daily Caller News Foundation, IRS’s New Ethics Chief Once Ordered Records Be Illegally Destroyed:

The new head of the Internal Revenue Service’s (IRS) ethics office once oversaw the illegal shredding of documents sought by the federal tax agency’s inspector general (IG), and allegedly retaliated on the colleague he believed snitched on him about it.

Stephen Whitlock was named director of the IRS Office of Professional Responsibility (OPR) in August 2015. The OPR supports “effective tax administration by ensuring all tax practitioners, tax-preparers, and other third parties in the tax system adhere to professional standards and follow the law,” according to the agency’s web site.

Whitlock’s chief of operations was, until recently, a former tax enforcement agent who attempted to avoid government payments by declaring bankruptcy and who even lost his official sidearm in a bar fight.

Additionally, in this newly-appointed 7-person leadership team are two of Lois Lerner’s former top deputies, at least one of whom was involved in the targeting of conservative and Tea Party non-profit applicants. Records of those activities also mysteriously disappeared after Congress began investigations in 2013. ...

Currently under Whitlock are section manager Elizabeth Kastenberg and legal analysis chief Garrett Gluth, both of whom previously worked closely with Lois Lerner in the IRS’s nonprofit tax office. Congressional testimony shows that Kastenberg was in charge of reviewing the audits of conservative-leaning nonprofits and was in the room when major decisions on the political audits were made.

Lerner was subsequently held in contempt of Congress after refusing to answer questions from congressional investigators. The IRS said the records showing her actions in the case had mysteriously disappeared.

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January 31, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Saturday, January 30, 2016

This Week's Ten Most Popular TaxProf Blog Posts

Is Wake Forest Law School's Offer To Pay Students To Take The GRE A U.S. News Rankings Ploy?

Wake Forest Law School (2016)Above the Law, This Law School Will Pay You To Take The GRE To Save Its U.S. News Rank From The Dreaded LSAT:

Law schools have been trying to do away with using the LSAT as an admissions requirement for quite some time. The ABA first took up the idea of axing the LSAT in 2011, and then in 2014, instituted a new rule that would allow some law schools (i.e., law schools connected to a university or college with an undergraduate program) to fill up to 10 percent of their entering classes with students who hadn’t taken the LSAT. Several law schools, including SUNY Buffalo, Drake, the University of Iowa, the University of Hawaii, and St. John’s University quickly rushed to begin enrolling students without LSAT scores. Just one year later, the ABA voted to repeal its LSAT exemption rule, effective with the incoming class of fall 2017.

Now that evidence of the great law school brain drain is on display for all the world to see, with LSAT profiles of matriculants dipping lower and lower every year, law school administrators are trying even harder to find a way to weasel out of having to admit students who have taken the LSAT (unless, of course, their LSAT scores are amazing; those students are allowed to continue taking the LSAT, if only because those high scores will help the law school’s U.S. News ranking instead of hurting it).

What are law schools trying to do now to keep the LSAT far, far away from their U.S. news ranking? At Wake Forest University School of Law ... has teamed up with Educational Testing Service (ETS) and two other law schools to see if the GRE would work as an alternative to the LSAT for law school admissions, and the school needs assistance from both current students and recent graduates for some experimentation. ...

How desperate is Wake Forest to get rid of the LSAT? Wake Forest is so desperate that it’s willing to pay people to take a standardized test with a math component. Yikes.

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January 30, 2016 in Law School Rankings, Legal Education | Permalink | Comments (4)

Oregon Dean Michael Moffitt To Step Down, Declines University's Offer To Serve A Second 5-Year Term

Oregon (2017)Statement of Oregon Dean:

In recent weeks I have had extensive conversations with President Schill and Provost Coltrane about our positive visions for the law school. They were helpfully candid and direct with their feedback stemming from the results of the recently-concluded five-year review process, and I am very grateful to them for presenting me with a generous offer to remain as Dean for a second five-year term. Earlier this week, however, after considerable soul-searching, I concluded that the time is right for me to conclude my service as Dean and for the University to seek new leadership for the law school.

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January 30, 2016 in Legal Education | Permalink | Comments (0)

ABA Tax Section Midyear Meeting

ABA LAThe ABA Tax Section Midyear meeting concludes today in Los Angeles. The full program is here. Today's highlight is the Keynote Address by Edward Kleinbard (USC), Fiscal Policy in an Age of Inequality:

Politicians of all persuasions are fixated on tax policy during this primary season, but this is the wrong question to debate. What we should care about is fiscal policy -- the net economic and social impacts of government taxing and spending, taken together. Government is not in the business of taxing us for sport, but rather of spending our money on public goods. Taxation is just how we finance the government we want.

A more muscular U.S. fiscal policy — not a further retrenchment — in fact responds to America's three great economic quandaries: (1) the surge in top-end inequality, where the income and wealth of the most affluent Americans have grown at rates that far outstrip the gains of the rest of America; (2) the stagnant incomes of the middle class; and (3) long-term growth. But we cannot see why this is true or how we can do better unless we look at the entirety of the opportunities for welfare-enhancing government investment and insurance, net of the cost of financing those programs through taxation. This outline presentation draws in part on my book, We Are Better Than This, to suggest why more government investment and insurance programs would lead to a happier and wealthier society. As in the book, the outline presentation benchmarks the United States against other countries to remind readers that we are unique in the world, and not always in a good way: we are a low-tax, small government, large and rich country that tolerates more poverty and much greater income inequality within our midst than do our peers.

Other Tax Profs with speaking roles today include:

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January 30, 2016 in ABA Tax Section, Conferences, Tax | Permalink | Comments (0)

The IRS Scandal, Day 996

Friday, January 29, 2016

Bernstein:  We Need Achievable Tax Tweaks, Not Pie-In-The-Sky Fundamental Tax Reform

Washington Post LogoWashington Post: We Desperately Need Major Tax Reform! Or Maybe Not …, by Jared Bernstein:

Fundamental tax reform is a fantasy. Now, let's get to work on improving our tax code.

It is an article of faith in national politics that the reform of the federal tax code is what’s standing between us and faster growth, higher productivity, better jobs, and whatever other good outcome you want to ascribe to this endeavor.

Well, riffing off of a) my own observations from decades in the trenches of this argument and b) this speech by President Obama’s chief economist Jason Furman, I disagree. Sure, there’s a lot of brush in the tax code that ought to be cleared out, some of which I’ll discuss in a moment. But these days, “tax reform” mostly means selling big, regressive tax cuts that will breed magic ponies by the herd. Instead of getting bogged down in an argument that has and will continue to lead nowhere, we’d be much better off to consider tweaks that fall far short of large-scale reform but could help—and have helped—in important ways.

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January 29, 2016 in Political News, Tax | Permalink | Comments (1)

Revising ABA Accreditation Standards To Stop Law Schools From Admitting Students With Little Hope Of Passing The Bar

ABA Legal EdDavid Frakt (Law Office of David Frakt, Orlando, FL), How to Fix ABA Standard 501:

Standard 501 of the ABA Standards and Rules of Procedure for Approval of Law Schools 2015-2016 states that “a school shall not admit an applicant who does not appear capable of satisfactorily completing its program of legal education and being admitted to the bar.” 

The ABA Council of the Section of Legal Education and Admissions to the Bar is responsible for enforcing this standard.   Unfortunately, for the past five years while  law school admissions standards have plummeted, the Council has shown no willingness to use to this standard for its intended purpose — to protect unqualified applicants from being admitted to law school when they have extremely poor prospects of actually becoming a lawyer.

According to Council Chair Justice Rebecca White Berch, "the Council is working on revising the Standards to make them clearer and more easily enforceable." In this post, I propose a way to revise Standard 501 which will accomplish this goal.

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January 29, 2016 in Legal Education | Permalink | Comments (4)

Weekly Tax Roundup

Weekly Legal Education Roundup