TaxProf Blog

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

Friday, November 3, 2017

Tax Policy In The Trump Administration

List Of 140 Colleges With Endowments Greater Than $100,000 Per Student That Would Be Subject To GOP's Proposed 1.4% Tax On Investment Income

Chronicle of Higher Education, If House Republicans Get Their Way, These Colleges Would See Their Endowments Taxed:

In a sweeping plan to rework the tax code unveiled on Thursday, Republicans in the House of Representatives floated a new strategy for raising revenue: Tax college endowments.

Some college endowments, that is.

Deep within the plan — look here, on Page 75 — is the language that spells out which institutions would be affected. The bottom line: Only the most-affluent colleges need worry. Colleges would be subject to the tax, set at 1.4 percent of net investment income, only if their endowment assets total at least $100,000 per student.

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November 3, 2017 in Legal Education, Tax | Permalink | Comments (12)

Jones: The U.S. News Law School Academic Reputation Scores, 1998-2017

2018 U.S. News LawRobert L. Jones (Northern Illinois), Academic Reputation Scores for Law Schools Rebound in 2016 and 2017 to Reclaim 2013 Levels:

This essay summarizes the results of the U.S. News & World Report (“U.S. News”) rankings published in 2016 and 2017 with respect to the academic reputation scores of law schools. In contrast to the general trend over the last twenty years, the U.S. News academic reputation scores for law schools improved in both 2016 and 2017. With respect to the 172 law schools analyzed as part of a longitudinal study published by this author four years ago, law school academic reputation scores improved by an aggregate of 4.1 points in 2016 and by another 5.9 points in 2017. These recent increases offset declines from 2014 and 2015 and brought the average academic reputation score for the law schools in the data set back to 2.542, virtually the same average for those law schools in 2013.4 The median score of the law schools in the data set rose in 2017 as well, from 2.3 to 2.4.

Chart 3

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November 3, 2017 in Law School Rankings, Legal Education | Permalink | Comments (1)

Max Planck, Norwegian Centre For Taxation & Notre Dame Host Conference On BEPS: Tax Evasion Or Tax Avoidance

ConferenceThe Max Planck Institute for Tax Law and Public Finance, Norwegian Centre for Taxation, and Notre Dame are hosting a conference on From Panama to BEPS: Tax Evasion or Tax Avoidance —International and National Policies to Confront Personal and Corporate Tax Strategies in Bergen, Norway (program):

Session #1:  Shifting Income Between Schedules

Session #2:  Income and Investment Shifting

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November 3, 2017 in Conferences, Scholarship, Tax | Permalink | Comments (0)

Book: Improving Refundable Credits While Reflecting The Lives Of The Working Poor

Leslie Book (Villanova), Meeting Taxpayers Where They Live: Improving US Refundable Credits While Reflecting the Lives of the Working Poor, 3 J. Tax Admin. ___ (2017):

This paper looks at the American experience in using tax law to deliver benefits to low and moderate-wage workers. First, examining two recent court cases where individuals improperly claimed the earned income tax credit, this paper explores some of the challenges to both taxpayers and tax administrators associated with using the tax system to deliver benefits that are dependent on levels of attachment to children and the presence of earned income. The paper then explores two approaches to improve compliance. One approach is a proposal in a recent Heritage Foundation policy briefing recommending that only parents with legal custody of their children should be entitled to receive the earned income tax credit. The state of California, in adopting the other approach, excludes self-employment income from its definition of earned income in its state earned income tax credit. Both measures fail to reflect characteristics of the lives of the working poor, including a growing reliance on multi-generational living arrangements and shared care of children and a surge in nontraditional employment associated with the gig economy.

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November 3, 2017 in Scholarship, Tax | Permalink | Comments (1)

$6.8 Billion Hedge Fund Tax Dispute Moves to IRS Appeals Office

RenaissanceFollowing up on my previous post, Senate Report Criticizes Hedge Funds' Use of Basket Options Tax Strategy:  Bloomberg, Mercer Hedge Fund Tax Dispute Moves to IRS Appeals Office:

A tax dispute involving Renaissance Technologies, the hedge fund firm whose co-chief executive officer is a prominent backer of President Donald Trump, is advancing to a new phase.

Members of the Internal Revenue Service’s Office of Appeals are scheduled to meet with lawyers for Renaissance in New York on Nov. 7, according to a person with knowledge of the matter. The meeting kicks off a review by an independent branch of the tax agency and suggests a resolution may be years away.

Although the dollar amount at issue has never been made public, Senate investigators estimated that Renaissance employees may have pocketed about $6.8 billion through what a bipartisan panel in 2014 called an “abusive” tax shelter. Renaissance executives maintain the transactions at issue were within the law and weren’t driven by tax savings.

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November 3, 2017 in IRS News, New Cases, Tax | Permalink | Comments (0)

Thursday, November 2, 2017

Kamin & Kysar: Temporary Tax Laws And The Budget Baseline

David Kamin (NYU) & Rebecca M. Kysar (Brooklyn), Temporary Tax Laws and the Budget Baseline, 157 Tax Notes 125 (Oct. 2, 2017):

In this article, we discuss the inconsistent use of the current policy baseline by policymakers, which undermines budget enforcement and represents a deep violation of Senate norms. We further describe how the potentially dangerous disruption to the budget process provides an opportunity to improve the official baseline.

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November 2, 2017 in Scholarship, Tax | Permalink | Comments (0)

Assessing President Trump's Child Care Proposals

Lily L. Batchelder (NYU), Elaine Maag (Urban Institute), Chye-Ching Huang (Auckland) & Emily Horton (Center on Budget and Policy Priorities), Assessing President Trump's Child Care Proposals, 70 Nat'l Tax J. ___ (2017):

During the presidential campaign, Donald Trump proposed three tax benefits for child care: a credit for low-income families, an above-the-line deduction, and tax-subsidized savings accounts. While these proposals laudably bring attention to the heavy burden that child care costs place on many low- and middle-income families, they are a case study in how not to reform child care policy. They are unduly complicated, arbitrarily exclude certain low-income families, deliver support well after child care payments are due, and provide the largest benefits to higher-income families who need the least help.

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November 2, 2017 in Scholarship, Tax | Permalink | Comments (0)

Tougher Bar Pass Standard And Use Of GRE In Law School Admissions Are On Agenda At ABA Meeting

ABA Section On Legal Education (2016)Law.com, Tougher Bar Pass Standard for Law Schools on Agenda at ABA Meeting:

A fight over a controversial proposal to toughen law school accreditation standards regarding bar exam pass rates is headed for round two.

Although it failed earlier this year in the effort, the nation’s accrediting body for law schools, the American Bar Association Council of the Section of Legal Education and Admissions to the Bar, is expected to try again at its meeting from Nov. 2 to 4 in Boston with a proposal to require law schools to have at least 75 percent of their graduates pass the bar within two years of graduation.

The debate over the rule comes at a time when schools are under pressure due to falling bar pass rates, mounting student debt, and a tight legal job market. The ABA’s legal education council has faced criticism for being too lenient and the new bar pass rule was supposed to show the council is trying to protect the consumer interests of students. The council has also cracked down on some law schools.

This week, it sent Florida Coastal School of Law, which had a 47.7 percent bar pass rate, a letter warning it was significantly out of compliance with standards. In March, it put Arizona Summit School of Law on probation for having a 25 percent bar passage rate among July 2016 test-takers, among other things. In addition, the ABA has sent noncompliance letters, for a variety of reasons, to seven other schools this year, including Atlanta’s John Marshall School of Law, Texas Southern University Thurgood Marshall School of Law, Thomas Jefferson School of Law and SUNY Buffalo School of Law, according to Paul Caron, editor of TaxProf Blog

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November 2, 2017 in Legal Education | Permalink | Comments (3)

2017 International Tax Competitiveness Ranking: U.S. Is 6th From The Bottom

Tax Foundation Logo2017 International Tax Competitiveness Index:

The International Tax Competitiveness Index (ITCI) seeks to measure the extent to which a country’s tax system adheres to two important aspects of tax policy: competitiveness and neutrality. ... To measure whether a country’s tax system is neutral and competitive, the ITCI looks at more than 40 tax policy variables. These variables measure not only the level of taxes, but also how taxes are structured. The Index looks at a country’s corporate taxes, individual income taxes, consumption taxes, property taxes, and the treatment of profits earned overseas. The ITCI gives a comprehensive overview of how developed countries’ tax codes compare, explains why certain tax codes stand out as good or bad models for reform, and provides important insight into how to think about tax policy.

Tax Foundation

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November 2, 2017 in Tax, Think Tank Reports | Permalink | Comments (1)

Macroeconomic Modeling Of Tax Policy: A Comparison Of Current Methodologies

Alan Auerbach (UC-Berkeley), Itai Grinberg (Georgetown), Thomas Barthold (Joint Committee on Taxation), Nicholas Bull (Joint Committee on Taxation), Gavin Elkins (Tax Foundation), Pamela Moomau (Joint Committee on Taxation), Rachel Moore (Joint Committee on Taxation), Benjamin Page (Tax Policy Center), Brandon Pecoraro (Joint Committee on Taxation) & Kyle Pomerleau (Tax Foundation), Macroeconomic Modeling of Tax Policy: A Comparison of Current Methodologies, 70 Nat'l Tax J. ___ (2017):

The macroeconomic effects of tax reform are a subject of significant discussion and controversy. In 2015, the House of Representatives adopted a new “dynamic scoring” rule requiring a point estimate within the budget window of the deficit effect due to the macroeconomic response to certain proposed tax legislation. The revenue estimates provided by the staff of the Joint Committee on Taxation (JCT) for major tax bills often play a critical role in Congressional deliberations and public discussion of those bills. The JCT has long had macroeconomic analytic capability, and in recent years, responding to Congress’ interest in macrodynamic estimates for purposes of scoring legislation, outside think tank groups — notably the Tax Policy Center and the Tax Foundation — have also developed macrodynamic estimation models. The May 2017 National Tax Association (NTA) Spring Symposium brought together the JCT with the Tax Foundation and the Tax Policy Center for a panel discussion regarding their respective macrodynamic estimating approaches. This paper reports on that discussion.

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November 2, 2017 in Scholarship, Tax | Permalink | Comments (0)

The Tax Implications Of Game Of Thrones

GOTIn a recent post of mine I referenced Game of Thrones (“GOT”), which is an HBO TV series based on the book collection “A Song of Ice and Fire” by George R.R. Martin. A commentator asked “Would it surprise you to know that some of your readers don't have the faintest idea of what your reference to "Game of Thrones" means?”

For such readers, I regret that you have not read this incredible fantasy adventure series. Not only because it’s good, but because references such as mine abound. Me nem nesa. A particularly amusing and creative spin comes from the otherwise staid ABA Section on Taxation. Each year the Tax Section puts out a “Tax Challenge” for both J.D. students and LL.M. students. This year’s Tax Challenge looks at some tax implications from GOT. Here’s how it starts:

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November 2, 2017 in ABA Tax Section, Bryan Camp, Celebrity Tax Lore, Tax | Permalink | Comments (2)

Pepperdine Launches Disaster Relief Clinic

PDRPepperdine Law Launches Disaster Relief Clinic:

Pepperdine Law has launched a Disaster Relief Clinic to serve people affected by the hurricanes in Texas, Florida, Puerto Rico, and the U.S. Virgin Islands as well as the wildfires in California. Professor Sophia Hamilton is leading the immediate responses with student volunteers through the School of Law’s pro bono program. Professor Jeff Baker will lead the full Disaster Relief Clinic in January.

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November 2, 2017 in Legal Education | Permalink | Comments (0)

Yin: Constructing Tax Legislation In A Highly Polarized Congress

George K. Yin (Virginia), Of Geodesic Domes and Mud Huts: Constructing Tax Legislation in a Highly Polarized Congress:

This essay attempts to connect the process and product of tax legislation. It argues that changes in the tax legislative process over the last 25-30 years have affected the type of legislation produced by Congress. After identifying several developments, including the changing composition of professional tax staffers working on legislation, the essay shows that a decline in one particular category of legislation — complex change to improve the execution of current policies by advancing the efficiency, equity, or administrability of existing law — may be a natural outgrowth of changing legislator and staff interests and incentives.

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November 2, 2017 in Scholarship, Tax | Permalink | Comments (1)

Wednesday, November 1, 2017

Tahk Presents The New Welfare Rights Today At Northwestern

Tahk (2017)Susannah Tahk (Wisconsin) presents The New Welfare Rights, 82 Brook. L. Rev. ___ (2017), at Northwestern as part of its Advanced Topics in Taxation Workshop Series hosted by Sarah Lawsky:

Participating in the tax system gives rise to what could be enormously powerful rights for poor people. The tax system has become one of the main tools the U.S. uses to fight poverty. A thick bundle of tax rights accompanies the many tax antipoverty programs. This paper is the first to recognize the potentially substantial rights that poor people have through the tax code. For decades, poverty law advocates and scholars have lamented the decline of the “welfare rights” that poor people once had in their benefits. No one has yet recognized that in fact poor people still have substantial rights in the tax code. These “new welfare rights” are not rights that lawmakers are attempting to weaken but rights that they are strengthening. However, lawyers and lawmakers have yet to unlock the potential that tax rights have to improve the lives of poor people. This paper discusses two methods by which this can happen.

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November 1, 2017 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Shaheen Presents Income Tax Treaty Aspects Of Nonincome Taxes Today At Penn

Shaheen (2017)Fadi Shaheen (Rutgers) presents Income Tax Treaty Aspects of Nonincome Taxes at Pennsylvania today as part of its Tax Policy Workshop Series hosted by Chris Sanchirico and Reed Shuldiner:

This discussion draft — prepared for the 7th Annual NYU/UCLA Tax Policy Symposium on New Approaches to Calculation and Allocation of the International Tax Base held on October 27, 2017 — considers the income tax treaty aspects of nonincome taxes such as the retail sales tax, the value added tax, the flat tax, the X tax and the destination-based cashflow tax. The current draft focuses on three main issues: one that the literature has thus far missed, another regarding an argument I disagree with, and a third the discussion of which was avoided. The point that was missed is the question of residence, which is a critical treaty gateway issue. The argument is that if the United States replaces the existing income tax with any nonincome tax discussed here, the affected U.S. taxpayers would no longer be U.S. residents for treaty purposes and as such would no longer be entitled to benefits under existing income tax treaties.

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November 1, 2017 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Marian Presents Is All Corporate Tax Planning Good For Shareholders? Today At Toronto

Marian (2016)Omri Marian (UC-Irvine) presents Is All Corporate Tax Planning Good for Shareholders? at Toronto today as part of its James Hausman Tax Law and Policy Workshop Series:

Multiple commentators argue that corporate managers have an affirmative duty to engage in corporate tax planning. Underlying this argument is the assumption that reduced corporate tax liability enhances shareholder value. In this article, I explain that this common perception is frequently incorrect. Corporate tax reduction schemes may increase the overall tax burden on shareholders. I make the following descriptive arguments in this regard:

First, I show that in many cases, successful (and legal) corporate tax planning schemes are not Pareto-optimal to shareholders. Some classes of shareholders (generally, tax-exempt shareholders) may see a net benefit, while other shareholders (usually taxable shareholders) experience a net loss. Second, I show that in certain instances it is reasonable to expect that legal corporate tax planning schemes will be overall inefficient. Meaning, the losses to taxable shareholders may exceed the gains to tax-exempt shareholders. Lastly, I show that because of an underappreciated agency problem, shareholders approve inefficient corporate tax plans, even when information about the potential detriment is freely available.

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November 1, 2017 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

How Keeping The Property Tax Deduction Could Harm Middle-Class Homeowners

Republican lawmakers have reportedly reached a deal to preserve the deduction for state and local property taxes while repealing the deduction for other state and local taxes as part of their proposed tax overhaul. The compromise is apparently intended to win the support of House Republicans from high-property-tax states like New Jersey and New York, who think that the deal is a good one for middle-class homeowners in their districts. But as Jed Graham points out in a nice article at Investors.com, preserving the property tax deduction as part of the Republican plan might have negative consequences for the very people that it’s intended to help.

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November 1, 2017 in Daniel Hemel, Tax | Permalink | Comments (0)

Princeton Review's Best 169 Law Schools (2018 Edition)

Princeton ReviewThe Princeton Review has published the 2018 edition of The Best 169 Law Schools (press release) (FAQs) (methodology):

The Princeton Review tallied its lists based on its surveys of 19,900 students attending the 169 law schools [an average of 118 per school]. The 80-question survey asked students to rate their schools on several topics and report on their experiences. Some ranking list tallies also factored in school-reported data.

Best Professors:  Based on student answers to survey questions concerning how good their professors are as teachers and how accessible they are outside the classroom.

  1. Virginia
  2. Duke
  3. Boston University
  4. Stanford
  5. Chicago
  6. Pepperdine
  7. Washington & Lee
  8. Notre Dame
  9. Boston College
  10. Charleston

Best Quality of Life:  Based on student answers to survey questions on: whether there is a strong sense of community at the school, whether differing opinions are tolerated in the classroom, the location of the school, the quality of social life at the school, the school's research resources (library, computer and database resources). 

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November 1, 2017 in Law School Rankings, Legal Education | Permalink | Comments (1)

ETS Releases Study Establishing Validity Of GRE In Predicting Law School Success, Using Data On 1L Grades From 21 Law Schools

GRE ETSPress Release, The GRE General Test is a Valid Predictor of Law School Success:

As a result of new research, the GRE ® General Test is poised to help law schools expand access to legal education and ease the burden for students interested in multiple education opportunities who would otherwise be required to prepare and pay for two tests.

After a series of school-specific studies, Educational Testing Service (ETS) — working with 21 U.S. law schools — conducted a national validity study to determine how well GRE ® scores predict success in law schools. Written by David M. Klieger, Brent Bridgeman, Richard J. Tannenbaum, Frederick A. Cline and Margarita Olivera-Aguilar, "The Validity of GRE ® Scores for Predicting Academic Performance at U.S. Law Schools" indicates that the GRE General Test is a strong, generalizably valid predictor of first-year law school grades. Furthermore, results show that the test adds to the prediction even when undergraduate grade point average already is available to predict those grades. The study also reiterated the reliability of the GRE test that had been shown in prior research.

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November 1, 2017 in Legal Education | Permalink | Comments (3)

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 October 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.)

72,112

Reuven Avi-Yonah (Mich.)

12,456

2

Michael Simkovic (USC)

37,386

Lily Batchelder (NYU)

7585

3

Paul Caron (Pepperdine)

33,609

D. Dharmapala (Chicago)

3792

4

D. Dharmapala (Chicago)

31,996

Michael Simkovic (USC)

3489

5

Louis Kaplow (Harvard)

28,618

Richard Ainsworth (BU)

3400

6

Vic Fleischer (San Diego)

24,032

Michael Graetz (Columbia)

2978

7

Ed Kleinbard (USC)

23,474

Andy Grewal (Iowa)

2940

8

James Hines (Michigan)

23,181

David Gamage (Indiana)

2926

9

Richard Kaplan (Illinois)

22,268

David Weisbach (Chicago)

2598

10

Ted Seto (Loyola-L.A.)

22,243

Ed Kleinbard (USC)

2451

11

Richard Ainsworth (BU)

22,137

Louis Kaplow (Harvard)

2079

12

Katie Pratt (Loyola-L.A.)

20,565

Hugh Ault (Boston College)

2075

13

David Weisbach (Chicago)

19,790

Darien Shanske (UC-Davis)

2027

14

Robert Sitkoff (Harvard)

19,293

Daniel Shaviro (NYU)

1891

15

Brad Borden (Brooklyn)

18,735

Steven Bank (UCLA)

1801

16

Carter Bishop (Suffolk)

18,366

William Byrnes (Texas A&M)

1771

17

Francine Lipman (UNLV)

17,969

Omri Marian (UC-Irvine)

1759

18

Chris Sanchirico (Penn)

17,924

Bridget Crawford (Pace)

1656

19

Daniel Shaviro (NYU)

17,883

Jordan Barry (San Diego)

1590

20

Jen Kowal (Loyola-L.A.)

17,734

Jeff Kwall (Loyola-Chicago)

1549

21

Bridget Crawford (Pace)

17,654

Paul Caron (Pepperdine)

1491

22

Dennis Ventry (UC-Davis)

16,634

Stephen Shay (Harvard)

1486

23

Steven Bank (UCLA)

15,762

Francine Lipman (UNLV)

1465

24

David Walker (BU)

15,759

Cliff Fleming (BYU)

1450

25

Gregg Polsky (Georgia)

14,286

Brad Borden (Brooklyn)

1439

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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November 1, 2017 in Scholarship, Tax, Tax Prof Rankings | Permalink | Comments (0)

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November 1, 2017 in About This Blog, Legal Education, Tax | Permalink | Comments (0)

The Non-Intuitive Tax Implications of Bridge

Here’s a fun item I came across in the Washington Post: It’s Official: Bridge Is Definitely Not a Sport.

Turns out that in England sporting organizations do not have to pay the Value Added Tax and, hence, don’t include VAT charges on admission fees to sporting events.

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November 1, 2017 in Bryan Camp, News, Tax | Permalink | Comments (0)

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November 1, 2017 in About This Blog, Legal Education, Tax | Permalink | Comments (0)

Tuesday, October 31, 2017

Zwick Presents Capitalists In The Twenty-First Century Today At Columbia

ZwickEric Zwick (Chicago) presents Capitalists in the Twenty-First Century (with Matthew Smith (U.S. Treasury Department), Danny Yagan (UC-Berkeley) & Owen Zidar (Chicago)) at Columbia today as part of its Davis Polk & Wardwell Tax Policy Colloquium Series hosted by Alex Raskolnikov and Wojciech Kopczuk:

Have passive rentiers replaced the working rich at the top of the U.S. income distribution? Using administrative data linking 15 million firms to their owners, this paper shows that private business owners who actively manage their firms are key for top income inequality. Private business income accounts for most of the rise of top incomes since 2000, and the majority of top earners receive private business income — most of which accrues to active owner-managers of mid-market firms in relatively skill-intensive and unconcentrated industries. Profit falls substantially after premature owner deaths. Top-owned firms are twice as profitable per worker as other firms despite similar risk, and rising profitability without rising scale explains most of their profit growth.

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October 31, 2017 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Davis: Morrissey And The IRS's Hostility To Reproductive Choice

Following up on my previous posts:

Tessa Davis (South Carolina), Morrissey v. U.S. and the IRS's Hostility to Reproductive Choice:

I’ll begin with what the court of appeals got right. First, the court did not read a “disease” requirement into the “structure or function” route to a medical expense deduction. Second, the court did not summarily reason that ARTs are unrelated to a “function of the body.” The court of appeals thus avoided two errors that plagued the earlier Magdalin v. Comm’r  case (a Tax Court memorandum opinion summarily affirmed by the First Circuit, and which I’ve written about here).

Unfortunately, the court of appeals got just about everything else wrong.

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October 31, 2017 in IRS News, New Cases, Tax | Permalink | Comments (2)

Lawyer Who Blamed Ethics Case On Mother Can't Discharge $500k In Student Loans

ABA Journal, Lawyer Who Blamed Ethics Case on Mother Can't Discharge $500k in Student Debt, Federal Judge Rules:

An Illinois lawyer who claimed his license suspension made it impossible to find appropriate work isn’t entitled to discharge student debt totaling more than $500,000, a Chicago federal judge has ruled.

U.S. District Judge Rebecca Pallmeyer ruled late last month against lawyer Donald Rosen, who was suspended from practice for at least three years after allegedly misappropriating over $85,000 in client funds, the Cook County Record reports.

Pallmeyer affirmed a bankruptcy court’s ruling against Rosen, who had paid only about $11,000 in student debt over 37 years. Rosen, 63, is a certified public accountant who has two master’s degrees along with a JD he earned in 2001. He was 50 when admitted to the Illinois bar in 2003.

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October 31, 2017 in Legal Education | Permalink | Comments (1)

Of Piketty And Perpetuities

PikettyEric A. Kades (William & Mary), Of Piketty and Perpetuities:

For the first time since independence, in a nation founded in large part on the rejection of a fixed nobility determined by birth and perpetuated by inheritance, America is paving the way for the creation of dynastic family wealth. Abolition or evisceration of the Rule Against Perpetuities in over half the states along with the likely repeal of the federal estate tax mean that there soon will be no obstacles to creating large pools of wealth that will insure lavish incomes to lucky heirs for generations without end.

The timing of these legal changes could hardly be worse. Marshaling innovative economic data extending back centuries, Thomas Picketty convincingly argues that the relatively egalitarian incomes enjoyed in developed economies from the end of World War II until around 1980 were an aberration and that we are in the process of returning to the historical norm of much greater income and wealth inequality. The driving force is the return to a world in which the rate of return to capital (r) exceeds the growth rate of national income (g) — another historical norm temporarily abrogated during the 20th century. The wealthy hold an extremely high fraction of national wealth, and when returns to that wealth exceed the growth rate of national income, their relative economic power (and all that goes with that) increases proportionally.

Table 1

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October 31, 2017 in Scholarship, Tax | Permalink | Comments (0)

ABA Notices To Law Schools About Potential Non-Compliance With Accreditation Standards

My Richard Nixon Moment

RMNPLC2

Politico, Richard Nixon, Awkward American Icon:

In many ways, Richard Nixon’s story is as American as The Great Gatsby — or so writes John Farrell in his recent article for Politico Magazine. He came from humble beginnings, pursued a dream beyond his rank in life and harbored great ambition fueled by the “laughs and slights and snubs” that he grew to expect from the moneyed political class. But even once secure in the Oval Office, Nixon, who died 20 years ago this week, was perpetually uncomfortable in the limelight, with a staff that struggled tirelessly to humanize him for public consumption. It was a challenge, and it inspired some of the most strained photo ops in the history of the American presidency. ... This photo of President Nixon walking on the beach in black wing-tipped shoes came to symbolize Nixon’s awkwardness. He once explained his fondness for formalwear to Bob Greene, the author of Fraternity: A Journey in Search of Five Presidents. “It isn’t a case of trying to be formal,” Nixon told Greene. “But I’m more comfortable that way … I’m always wearing a coat and tie. Even when I’m alone. If I were to take it off, probably I would catch cold. That’s the way it is.”

I had my Richard Nixon moment yesterday, as I agreed to be photographed at Paradise Cove in Malibu for the forthcoling issue of our Pepperdine Law magazine. The photographer insisted that I wear a suit to the beach, and then asked me to pose in the sand, ala Richard Nixon.

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October 31, 2017 in Legal Education | Permalink | Comments (4)

Some Positive News About The IRS

IRS Logo 2The IRS does not have an easy job.  Remember, it's NOT the "IRS Code" because the IRS is just the agency stuck with the task of carrying out the will of Congress.   And the IRS must do this job all while being a political soccer ball — and since the mid-1990's the Republican team has hogged that ball, kicking with more enthusiasm than enlightenment.  So it was nice to see a positive story about tax administration picked up by USA Today, especially because USA stories also appear in little town newspapers, like the one I read here in Lubbock, Texas (the Lubbock Avalanche-Journal:  IRS: Public-private Crackdown Slashes Identity Theft, Tax Refund Fraud, the story comes from a press release by the IRS that explained:

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October 31, 2017 in Bryan Camp, IRS News, Tax, Tax Practice And Procedure | Permalink | Comments (1)

Avi-Yonah Posts Tax Papers on SSRN

October 31, 2017 | Permalink | Comments (0)

Monday, October 30, 2017

Scharff Presents Pricing Externalities Under State Law Today At Loyola-L.A.

Scharff (2017)Erin Scharff (Arizona State) presents Green Fees: Pricing Externalities Under State Law at Loyola-L.A. today as part of its Tax Policy Colloquium Series hosted by Katie Pratt and Ted Seto:

Policymakers at the state and local level are increasingly interested in using market-based pricing mechanisms as regulatory tools. At the state level, Massachusetts, Rhode Island, and Washington have recently considered state-level carbon pricing, while California is moving forward with its own cap-and-trade program. At the local level, municipal governments are increasingly turning to stormwater remediation fees to pay for the treatment of municipal runoff required by the Clean Water Act. And Philadelphia, Berkeley, and Seattle all recently joined Chicago and impose a soda tax on high-caloric beverages.

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October 30, 2017 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Private Law School Tuition Discount Rate Rose To 39% In 2016

Tuition DiscountingAccessLex Institute & National Association of College and University Business Officers, Tuition Discounting Study of Private Law Schools:

The practice of tuition discounting — providing institutional aid to select students to offset the price of attending a college or university — is widespread in higher education, and its use has increased over the past few decades. NACUBO annually collects tuition discount rates and other data related to discounting among undergraduates at private nonprofit institutions, but very little is known about discounting practices at law schools or other graduate/professional programs.

The 2016 NACUBO/AccessLex Tuition Discounting Study of Private Law Schools was commissioned by AccessLex Institute in part to provide more recent information on tuition discounting practices at law schools, and to measure the effects of discounting on law schools’ finances. The use of institutional grant aid to attract and retain law students has become even more important, as many programs have had to grapple with declines in their numbers of applicants and enrollments. This challenging context has prompted law schools to implement a variety of practices and policies to raise their enrollments, including increasing their financial aid expenditures.

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October 30, 2017 in Legal Education | Permalink | Comments (0)

Hemel: A Qualified Defense Of The State And Local Tax Deduction

Daniel J. Hemel (Chicago), Easy on the SALT: A Qualified Defense of the Deduction for State and Local Taxes:

Congressional Republicans and Trump administration officials have said that they plan to repeal the deduction for nonbusiness state and local taxes (SALT) as part of a comprehensive tax reform package. This essay critically examines the major arguments for repealing the SALT deduction. Repealing the deduction and using the resulting revenues to reduce federal rates across the board would likely lead to greater tax-induced deadweight loss overall. Repealing the deduction also would distort decisions about the financing of education and health care, which together account for more than half of all state and local government spending. Repeal would further encourage a shift from nonbusiness to business taxes at the state and local level, and potentially would result in more borrowing by subnational governments in the short and medium term. It would have ambiguous effects on the progressivity of the overall tax system, and it would exacerbate existing differences in federal tax burdens across states.

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October 30, 2017 in Scholarship, Tax | Permalink | Comments (0)

NY Times: The GOP's 'Pathetic' Proposal To Eliminate The State & Local Tax Deduction

New York Times editorial, Who Does Benefit From the Tax Cut Anyway?:

The House on Thursday narrowly approved a budget blueprint that Republican leaders and President Trump hope to use as a legislative vehicle to cut taxes. Very wealthy American families will be the biggest beneficiaries of these cuts while many in the upper middle class could actually see their taxes go up.

While Republicans still have not produced a detailed proposal, a tax framework they published last month and their public comments make clear that they are doing everything they can to enrich the 1 percent — a group that would receive 80 percent of the benefits, according to the Urban-Brookings Tax Policy Center.

One change is getting a lot of attention: Republican leaders want to eliminate the state and local tax deduction. This would hurt many Americans, especially those who live in states like California and New York with high state and local taxes.

NY Times Map

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October 30, 2017 in Tax | Permalink | Comments (6)

Lesson From The Tax Court: Substantiation And The Cohan Rule

Tax Court (2017)The married taxpayers in Partyka v. Commissioner, T.C. Sum. Op. 2017-79 (Oct. 25, 2017), fell prey to scammers who scheme was to rent a furnished house and then steal the furnishing. The scammers stole a substantial amount of household furnishings from the taxpayers and the taxpayer pegged the value of the stolen items at just under $30,000 for which they claimed a §165 loss deduction.

There was an interesting timing issue in the case, but what struck me was the long discussion of substantiation, and how what may be sufficient documentation of loss for one purpose (police investigation, prosecution) may not be enough for tax purposes. Indeed, the Tax Court found that the taxpayers were potentially liable for the §6662 accuracy-related penalty. I question, however, whether the Tax Court properly applied the Cohan rule. For details, see below the fold.

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October 30, 2017 in Bryan Camp, New Cases, Tax | Permalink | Comments (7)

Graetz: Are We Heading Off A Fiscal Cliff?

Michael J. Graetz (Columbia), Heading Off a Cliff?:

The major tax policy challenge of the 21st century is the need to address the nation’s fiscal condition fairly and in a manner conducive to economic growth. But since California adopted Proposition 13 nearly forty years ago, antipathy to taxes has served as the glue that has held the Republican coalition together. Even though our taxes as a percentage of our economy are low by OECD standards and low by our own historical experience, anti-tax attitudes have become even more important for Republicans politically, since they now find it hard to agree on almost anything else. So revenue-positive, or even revenue-neutral, forms of tax reform — at least as long as the GOP maintains its legislative majority — are politically impossible.

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October 30, 2017 in Scholarship, Tax | Permalink | Comments (0)

Brittany Stringfellow Otey Is Honored At Union Rescue Mission's Dare To Dream Gala

URMCongratulations to Brittany Stringfellow Otey, Director of Pepperdine's Legal Aid Clinic at the Union Rescue Mission on Skid Row in downtown Los Angeles, on receiving the Lyman Stewart Founders Award Saturday night at the Dare to Dream Gala.  The Union Rescue Mission is a Christian organization that is the largest private mission serving the homeless in the United States.  I was honored to present the award to Brittany, and told the audience in part:

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October 30, 2017 in Legal Education | Permalink | Comments (0)

TaxProf Blog Weekend Roundup

Sunday, October 29, 2017

Georgetown Student Group Faces Loss Of University Funding For Promoting Catholic Church's Views On Marriage; Monday Hearing Will Decide If Group Is Guilty Of 'Fostering Hatred And Intolerance'

Love Saxa

Washington Post, Georgetown Students Have Filed a Discrimination Complaint Against a Campus Group Promoting Heterosexual Marriage:

A Catholic student group at Georgetown University that promotes the benefits of traditional marriage risks losing its funding and other university benefits after being accused of fostering hatred and intolerance.

Love Saxa advocates for marriage as “a monogamous and permanent union between a man and a woman,” the group states in its constitution. [Georgetown's motto is Hoya Saxa ("What Rocks").] That definition of marriage happens to be in line with that espoused by the Catholic Church, raising the question of how administrators at Georgetown, the United States’ oldest Catholic and Jesuit institution of higher learning, will handle the controversy if it eventually comes before them.

“I suppose the question for Georgetown is whether they think Catholic kids can still be Catholic there,” said Chad Pecknold, a theology professor at the Catholic University of America. ...

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October 29, 2017 in Legal Education | Permalink | Comments (7)

University Of Arkansas To Change Tenure Policy To Permit Firing Of Faculty For Lack Of Collegiality

Arkansas LogoChronicle of Higher Education, U. of Arkansas System Considers Changes to Ease Tenured-Faculty Firings:

The University of Arkansas system is considering proposed changes in its tenure policy that could make it easier to fire professors and, faculty members say, chip away at academic freedom.

A key concern, they say, is language in the proposal that outlines when professors may be fired for cause. It includes a "pattern of disruptive conduct or unwillingness to work productively with colleagues." That language, some faculty members say, effectively means collegiality — or the lack thereof — can be used as a reason to dismiss a professor.

Using collegiality as a criterion to evaluate faculty members has long been condemned by the American Association of University Professors.

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October 29, 2017 in Legal Education | Permalink | Comments (9)

Christian Legal Society National Conference On Discovering Joy In The Law

CLSI was honored to join the Pepperdine contingent at this weekend's Christian Legal Society's National Conference on Discovering Joy In The Law () in Newport Beach, California. Pepperdine was one of the sponsors of the conference (and apparently paid for this chocolate fondue mountain), so I had the honor of giving brief welcoming remarks.  I cannot be sure, but my guess is that it was the first time the attendees heard C.S. Lewis compared to Lin-Manuel Miranda.

CLSP

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October 29, 2017 in Legal Education | Permalink | Comments (2)

The Top Five New Tax Papers

SSRN LogoThis week's list of the Top 5 Recent Tax Paper Downloads is the same as last week's list. The #1 paper is #29 among 13,063 tax papers in all-time downloads.

  1. [3,734 Downloads]  Private Benefits in Public Offerings: Tax Receivable Agreements in IPOs, by Gladriel Shobe (BYU)
  2. [334 Downloads]  Background and Current Status of FATCA and CRS, by William Byrnes (Texas A&M)
  3. [259 Downloads]  The Rise of Trust Decanting in the United States, by Robert Sitkoff (Harvard)
  4. [236 Downloads]  Rejecting Charity: Why the IRS Denies Tax Exemption to 501(C)(3) Applicants, by Terri Lynn Helge (Texas A&M)
  5. [166 Downloads]  Slicing and Dicing: The Structural Problems of the Tax Reform Framework, by Reuven Avi-Yonah (Michigan)

October 29, 2017 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

Saturday, October 28, 2017

This Week's Ten Most Popular TaxProf Blog Posts

Predicting Enrollment At Michigan: The Strategic Use Of Financial Aid To Craft A Class

Michigan Law Logo (2015)Heeyun Kim,  Meghan Oster,  Natsumi Ueda & Stephen DesJardins (Michigan), Predicting Law School Enrollment: The Strategic Use of Financial Aid to Craft a Class:

In this study, we explore what factors predict student decisions to enroll at law schools and how the probability of enrollment varies across students with various profiles and conditions. To find the predictors of enrollment and differences in the probability of enrollment across groups, we employ a logistic regression model using the institutional data obtained from one of the top-ranked law schools in the nation. After estimating the logistic regression model, the probabilities of enrollment are calculated for students with specific profiles and conditions based on the coefficients generated by the logistic regression analysis. The findings reveal many factors that are associated with the probability of enrollment at this law school. Particularly, students with higher academic qualifications, underrepresented minority status, the most selective undergraduate school, STEM background, and previous applicant status have a lower probability of enrollment compared to their respective counterparts.

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October 28, 2017 in Legal Education | Permalink | Comments (0)

Foreigners Would Receives $700 Billion (35%) Of Trump's Proposed $2 Trilllion Corporate Tax Cut

Steven M. Rosenthal (Tax Policy Center), Slashing Corporate Taxes: Foreign Investors Are Surprise Winners, 157 Tax Notes 559 (Oct. 23, 2017):

The Unified Framework for Fixing Our Broken Tax Code (the “Big Six” tax plan) would revise business and individual taxes. Most significantly, on the business side, the Big Six tax plan would lower the corporate income tax rate from 35 percent to 20 percent, which would reduce corporate taxes by an average of $200 billion a year, or $2 trillion over the 10-year budget window. However, in the short run, a surprisingly large portion of this relief would end up in the pockets of foreign investors.

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October 28, 2017 in Tax, Tax Policy in the Trump Administration | Permalink | Comments (3)

A 'Marvel'ous Dinner

Tax Court (2017)On October 19th the Tax Court was in Lubbock in the person of Chief Judge Paige Marvel.  The Court’s involvement with the ABA Tax Section is well known, but I did want to give a shout-out to its equally important involvement with legal education.  Each year the tax faculty at Tech Law (myself, Alyson Outenreath, Steve Black, Vaughn James, and Terri Morgeson) hold a Tax Careers Panel at the Law School (graciously sponsored in recent by the Texas State Bar Tax Section). We always time it so that we can invite the Tax Court Judge to be on the panel. We are delighted that every judge has participated.

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October 28, 2017 in Bryan Camp, Law School, Legal Education, Miscellaneous, Tax, Tax Profs, Teaching | Permalink | Comments (0)

Friday, October 27, 2017

7th Annual NYU/UCLA Tax Policy Symposium: New Approaches To The International Tax Base

NYU UCLA (2016)The Seventh Annual NYU/UCLA Tax Policy Symposium on New Approaches to Calculation and Allocation of the International Tax Base takes place today at NYU:

At this year’s symposium, panelists will consider the merits of origin-based versus destination-based systems as well as the merits of income versus cashflow taxes. Discussion about various reform options will encompass theoretical fundamentals, likely tax planning responses, administrability, and tax treaty compatibility.

Panel #1:  Destination-Based Cashflow Taxes and Tax Planning
Moderator:  Dan Shaviro (NYU)
Lead Author:  John Vella (Oxford)
Commentators:  Debbie Paul (Wachtell, Lipton), Scott Wilkie (Blakes)

Panel #2:  Feasible Approaches to Residence-Based Apportionment
Moderator:  Eric Zolt (UCLA)
Lead Author:  Wei Cui (UBC)
Commentators:  Bob Peroni (Texas), Steven Dean (Brooklyn)

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October 27, 2017 in Conferences, Scholarship, Tax | Permalink | Comments (0)

Weekly SSRN Tax Article Review And Roundup

This week, Ari Glogower (Ohio State) reviews a new work by Miranda Perry Fleischer (San Diego) and Daniel Hemel (Chicago), Atlas Nods: The Libertarian Case for a Basic Income, 2017 Wis. L. Rev. ___ .

Glogower (2016)How could a libertarian view—which generally believes in limited redistribution and limited government—ever support a basic income program (UBI), which redistributes tax revenues to the public through unconditional cash grants?

In their new work, Miranda Perry Fleischer and Daniel Hemel undertake a careful analysis of libertarian thought to identify the libertarian case for a UBI.  The work first identifies the particular strains of libertarianism that would sanction a UBI.  In particular, the authors argue that provision for a minimal level of material well-being is consistent with both minimal state libertarianism (for example, of Robert Nozick) as well as classical liberalism (for example, of Milton Friedman).  Furthermore, libertarians would generally favor cash over in-kind transfers, since the former preserve individual autonomy and choice.  The authors proceed to consider specific design choices for a UBI program from a libertarian perspective, and argue that a libertarian would prefer a grant that is not tied to work effort (due to a skepticism for state capacity to determine earning capacity) and would prefer an annual to a lump sum grant (since the latter will pay too much, or too little, depending on the recipient’s lifespan).

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October 27, 2017 in Ari Glogower, Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)