TaxProf Blog

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

Saturday, March 31, 2018

John Marshall Law Prof: We Are Not The 'Ugly Stepsister' to Savannah's 'Cinderella' Faculty

SavannahFollowing up on my previous posts:

Law.com op-ed:  John Marshall Professor Responds to Savannah Law Alum's 'Outburst', by Lance McMillan (John Marshall):

In your March 28th article, “Law Students and Alums Seek to ‘Save Savannah’ from Closing,” you quoted Constance Cooper, a Savannah Law School alum, to cast aspersions on the faculty of Atlanta’s John Marshall Law School: “Cooper said the quality of [Savannah’s] faculty also sets it apart … ‘When you look at the quality of the education we have, and you compare it to Atlanta’s John Marshall, it’s laughable … We are as similar to Atlanta’s John Marshall as Cinderella is to an ugly stepsister.’”

This tenuous attempt of reasoning by analogy can be discounted as an isolated outburst, born of ignorance and pique. What cannot as easily be dismissed, however, is the willingness of the Daily Report to use its substantial platform to publicize far and wide such a casual slander against an entire faculty from a person who went to a different school over 250 miles away. As a faculty member of John Marshall for over 10 years, the respect for my colleagues compels me to respond.

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March 31, 2018 in Legal Education | Permalink | Comments (2)

The 'Official' IRS Audit Rate Is 0.7%, But The 'Real' Audit Rate Is 6.2%

IRS Logo 2Forbes:  IRS Official Audit Rate Down But The "Real" Audit Rate Is The Problem, by Ashlea Ebeling:

The Internal Revenue Service audited only 0.6% of 2016 individual income tax returns, according to its 2017 Data Book released today. That means your chance of an official audit was about 1 in 160.

The National Taxpayer Advocate, an IRS watchdog, begs to differ. The way it defines “audit,” your chance of hearing from the IRS is more like 1 out of 16.

For fiscal year 2016, when the official IRS audit rate for individual income tax returns was 0.7%, the Advocate’s office found that the “unreal” audit rate was 6.2%.

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March 31, 2018 in IRS News, Tax | Permalink | Comments (3)

Friday, March 30, 2018

Lederman Presents Information Matters In Tax Enforcement At Duke

Lederman (2018)Leandra Lederman (Indiana) presented Information Matters in Tax Enforcement at Duke yesterday as part of its Tax Policy Workshop Series hosted by Lawrence Zelenak:

Most legal and economics scholars recognize that the government needs information about taxpayers’ transactions in order to determine whether their reporting is honest, and that third-party reporting helps the government obtain that information. Yet, a recent paper by Professor Wei Cui [Taxation Without Information: The Institutional Foundations of Modern Tax Collection] asserts that “modern governments can practice ‘taxation without information.’” Cui’s argument rests on two premises: (1) “giving governments effective access to taxpayer information through third parties does not explain the success of modern tax administration” because, he argues, other important taxes, such as the value added tax (VAT), do not involve information reporting; and (2) modern tax administration succeeds because business firms are “sites of social cooperation under the rule of law,” fostering compliance. As this Essay argues, the literature demonstrates that Cui is wrong on both points.

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March 30, 2018 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Weekly SSRN Tax Article Review And Roundup: Glogower Reviews Marian's Is Corporate Tax Planning Good For Shareholders?

This week, Ari Glogower (Ohio State) reviews a new work by Omri Marian (UC-Irvine), Is All Corporate Tax Planning Good for Shareholders?, 52 U.C. Davis L. Rev. __ (2018). 

Glogower (2016)A common assumption is that tax planning by corporate managers benefits shareholders. Since corporate income is subject to “double taxation” at both the corporate and shareholder levels, tax-reduction strategies by corporate managers can reduce the entity-level tax, thereby increasing the after-tax corporate earnings available to the shareholders. 

Omri Marian’s new article challenges this conventional assumption by presenting a more nuanced understanding of the dynamic between corporate and shareholder-level tax effects. The work demonstrates how corporate tax planning may in fact disadvantage shareholders in many cases, and why certain shareholders may be unable to prevent it. 

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March 30, 2018 in Ari Glogower, Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (2)

Weekly Legal Education Roundup

Tax Policy In The Trump Administration

Chris Pietruszkiewicz Named President Of University Of Evansville

Chris
Stetson Law School Dean (and Tax Prof) Chris Pietruszkiewicz has been named President of Evansville University:

The University of Evansville has appointed Christopher M. Pietruszkiewicz (petra-skev-ich) as the 24th president of the institution.

Pietruszkiewicz, who currently serves as dean and professor of law at Stetson University’s College of Law, was chosen for the position after an exhaustive nationwide search. The presidential search committee was led by UE trustee Sally Rideout, and the Board of Trustees elected Pietruszkiewicz in a formal vote on March 28.

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March 30, 2018 in Legal Education, Tax, Tax Prof Moves | Permalink | Comments (0)

Bar Pass Rate Bonanza: The 'Ultimate' Law School Rankings

Following up on my previous posts:

Law.com, Bar Pass Rate Bonanza: The 'Ultimate' Law School Rankings:

Today, we’re looking at what’s dubbed the “ultimate bar pass rate.” For the first time, the ABA has released the information, which is the percentage of a school’s graduates who passed the bar within two years of graduation. Unlike first-time bar pass rate, the ultimate pass rate captures graduates who may have failed the exam on their initial attempt, but passed on their second or third tries. Nationwide, nearly 88 percent of 2015 grads passed the exam within two years. Baylor University School of Law posted the highest ultimate bar pass rate—all 109 of its bar takers passed in that time period.

Top 10

The University of Detroit Mercy School of Law had the lowest ultimate bar pass rate in 2015, at just under 57 percent.

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March 30, 2018 in Legal Education | Permalink | Comments (1)

McCormack: America's (D)evolving Childcare Tax Laws

Shannon Weeks McCormack (University of Washington), America's (D)evolving Childcare Tax Laws, 53 Ga. L. Rev. ___ (2018):

Proponents have touted the ability of the Tax Cuts and Jobs Act (the TCJA) — enacted in the twilight of 2017 — to help American working families. But while the TCJA expanded some benefits available to parents with dependent children, these parental tax benefits may be claimed regardless of whether or to what extent childcare costs are incurred to work outside the home. To help working parents with these costs (which are often their largest expense), Congress might have turned to two other mechanisms in the tax law — the “child and dependent care credit” and the “dependent care exclusion.” While these childcare tax benefits are only available to working parents that pay for childcare, stringent limitations have kept many from recovering anything near their actual costs, particularly in the critical years before children reach school-age. As a result, the Code has been taxing families with different childcare needs inequitably. But the TCJA left these childcare tax laws untouched and thus did nothing to address this problem. By exploring critical junctures in their development, this Article seeks to understand how America’s tax laws have (d)evolved in this manner and, in doing so, situates some of TCJA’s alleged reforms into their historical context.

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March 30, 2018 in Scholarship, Tax | Permalink | Comments (0)

Dickerson: Brain Training For Law Student Success

Darby Dickerson (Dean, John Marshall (Chicago)), Brain Training for Academic Success:

This paper describes the collaboration between Texas Tech University School of Law and the Brain Performance Institute at the University of Texas-Dallas to implement high-performance brain training for law students. The pilot program used a variation of BPI's Strategic Memory Advanced Reasoning Training (SMART), which teaches students to train their brains more analytically by focusing on strategies to enhance strategic attention, integration, and innovation. Grounded in evidence-based neuroplasticity concepts, SMART focuses on an individual's fluid intelligence. For law students, brain training can help in many aspects of the academic program and can be targeted to help improve bar passage.

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March 30, 2018 in Legal Education | Permalink | Comments (0)

Thursday, March 29, 2018

Hemel Presents Sexual Harassment And Corporate Law Today At Brooklyn

HemelDaniel Hemel (Chicago) presents Sexual Harassment and Corporate Law, 118 Colum. L. Rev. ___ (2018) (with Dorothy Lund (Chicago)) at Brooklyn today as part of its Faculty Workshop Series:

The year 2017 marked an inflection point in the evolution of social norms regarding sexual harassment. While victims of workplace harassment had long suffered in silence, the surfacing of serious sexual misconduct allegations against Hollywood producer Harvey Weinstein encouraged many more victims to tell their personal stories of abuse. These scandals have spread beyond Hollywood to the rest of corporate America, leading to the departures of several high-profile executives as well as sharp stock price declines at a number of firms. In the past year, shareholders at four publicly traded companies have filed lawsuits alleging that corporate directors and officers breached their fiduciary duties and/or violated federal securities laws in connection with sexual harassment scandals at those firms. More such suits are likely to follow in the months ahead.

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March 29, 2018 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Why Legal Writing Is 'Doctrinal' And Profound

Harold Anthony Lloyd (Wake Forest), Why Legal Writing is 'Doctrinal' and More Importantly Profound:

So as long as we must use the questionable term “doctrinal” when referring to law school courses, this article challenges everyone (including law professors who teach legal writing) to stop directly and indirectly referring to legal writing as a “non-doctrinal” course. Use of “non-doctrinal” can be code for “lesser” thereby suggesting that legal writing has lesser import than other law school courses. Erroneously so marking legal writing as “lesser” damages legal education across the board. It damages students and law professors not teaching legal writing by suggesting that legal writing and the theory, skills and insights taught by legal writing merit less of their time which in turn increases the odds that both students and other faculty will remain ignorant of the critical knowledge and skills that legal writing teaches. It also damages law professors teaching legal writing because it invites disparate treatment such as lack of tenure, lower pay, and lack of equal respect. As a result, law professors teaching legal writing encounter greater difficulties in publishing scholarship, difficulties which deprive us all of the scholarship so silenced or deterred. Such erroneous code also ignores the profound subject matters addressed in legal writing courses today, a number of which subject matters are briefly surveyed in this article.

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March 29, 2018 in Legal Education | Permalink | Comments (0)

Herzig: Passover, Chametz, And Tax

David Herzig (Valparaiso), Does The Passover Tradition Of Selling Chametz Trigger Tax?:

Passover starts at sun-down Friday this year. As many of you already know, Passover is one of the most important Jewish festivals.

During Passover, the Jewish people remember how Moses led the people of Israel out of slavery by Egypt over 3000 years ago. Moses promised that God would send ten plagues on Egypt if the Pharaoh did not let the Israelites go free. The Pharaoh did not comply and the plagues were sent upon Egypt. After the last plague, the killing of the first born, the Pharaoh freed the people of Israel. (The holiday is known as Passover because God passed over the Israelite houses marked with lamb’s blood).

Fearing the Pharaoh might change his mind, the Israelites rushed out of the country without having time for their bread to rise. In the Exodus, the Jewish people had no leaven bread. So, during the remembrance of Passover, Jews eat unleavened bread, called Matzah, to honor the plight of their ancestors.

At this point, you may be asking yourself what does Passover have to do with tax?

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March 29, 2018 in Tax | Permalink | Comments (1)

Infanti Named Walthour Endowed Professor Of Law At Pittsburgh

Infanti (2016)Press Release:

The University of Pittsburgh School of Law has appointed ... Anthony C. Infanti as the Christopher C. Walthour, Sr. Endowed Professor of Law. ...

Anthony C. Infanti’s appointment as the Christopher C. Walthour, Sr. Professor of Law recognizes his eminence in the field of tax law and critical legal theory. Infanti’s influential scholarship has spanned the fields of federal income tax, corporate and international tax, and critical legal studies, with an emphasis on the intersection of tax law with sexual orientation, gender, and gender identity.

Infanti is also a consummate leader in many roles in legal education, serving as a member of and in multiple leadership roles with the American Bar Association’s Section on Taxation and the American Civil Liberties Union. His use of innovative and effective pedagogical methods has been recognized by the Law School’s Excellence in Teaching Award, the Chancellor’s Distinguished Teaching Award, and his appointment as a Fellow of the national Educating Tomorrow’s Lawyers Consortium.

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March 29, 2018 in Legal Education, Tax | Permalink | Comments (0)

State-By-State Comparison Of Bar Pass Rates

Law.com, Bar Pass Rates: Compare the States:

The ABA this year overhauled the way it reports schools’ bar pass rates in a bid to get that information out to the public faster, and to make it easier to compare data across schools.

We’re taking a deeper dive into the numbers this week. Today, we’re focusing on the first-time bar pass rates of individual states, which vary widely. In our first report on Tuesday, we looked at the first-time bar pass rates of each law school in 2017, and how they performed in comparison to state averages.

Here are the five states with the highest first time bar taker pass rates:

Top 5

Here are the five states with the lowest first time bar taker pass rates:

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March 29, 2018 in Legal Education | Permalink | Comments (0)

Concordia Seeks To Hire A Tax VAP

Concordia Logo (2018)Concordia University School of Law is seeking candidates for full-time Visiting Assistant Professor positions either for the Fall 2018 semester or the 2018-2019 academic year.

The School of Law anticipates that the visitor(s) will teach up to two courses each semester and may teach in one or more of the following areas: taxation, wills, trusts and estates, criminal law, criminal procedure, evidence or in the clinical programs.  Visiting faculty provide instruction to law students, and may, based upon their interests and experience, provide service to the law school and University and engage with other professionals and the public to contribute to the intellectual exchange of ideas, to improve the law, and to educate the profession about the law.

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March 29, 2018 in Legal Education, Tax, Tax Prof Jobs | Permalink | Comments (0)

Houston Business And Tax Law Journal Issues Call For Papers

Houston (2017)The Houston Business and Tax Law Journal is now accepting submissions to be considered for publication in its 19th Fall edition:

We publish two issues per year on various current business and tax law matters. Our latest issue features tax articles written by Paul Nylen of University of the Wisconsin-Whitewater on Treasury regulations of section 385, and Kyle Richard, Director of Tax at the University of Washington, on the European Commission’s state aid decisions.

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March 29, 2018 | Permalink | Comments (0)

The IRS Scandal, Day 1788: Lois Lerner’s Last Laugh

Wall Street Journal:  Lois Lerner’s Last Laugh, by William McGurn:

Just after Labor Day 2016, when the U.S. presidential race was entering full swing, columnist George F. Will urged Congress to undertake a seemingly futile gesture: He wanted the House to impeach John Koskinen, commissioner of the Internal Revenue Service.

Mr. Koskinen had taken over as head of the IRS after it had been exposed for singling out for mistreatment conservative groups applying for tax-exempt status. He lied to Congress when he said he had produced all of Lois Lerner’s emails, allowed documents under subpoena to be destroyed, and generally behaved in a way that helped ensure there would be no hard consequences for the abuses. Though Mr. Koskinen had only a few months left on the job, Mr. Will argued that impeaching him might help Congress restore its much diminished standing as a coequal branch of government.

Not quite two years later, Congress continues to pay the price for letting Ms. Lerner and Mr. Koskinen ride freely into the sunset. Though the IRS and other federal agencies—including the State and Justice Departments, as well as the Federal Bureau of Investigation—are now headed by Trump rather than Obama appointees, they continue to spurn congressional oversight demands with near impunity. ...

Congress has its own ways of showing its displeasure, including cutting the budgets of recalcitrant agencies. Given budget rules, this would require the cooperation of some Democrats, who are unlikely to go along. Nevertheless, the power of the purse remains a tool Congress can use to make the executive branch pay a price for its actions.

Above all, there is impeachment. The constitutional power to remove officials from office for “treason, bribery or other high crimes and misdemeanors” is a writ far broader than anything a special counsel enjoys.

Then again, it’s not easy to impeach a federal official, and it shouldn’t be. As Mr. Will pointed out in his column calling for Mr. Koskinen’s impeachment, “no appointed official of the executive branch has been impeached in 140 years.” Mr. Koskinen was not impeached, and he and Ms. Lerner rode off into the sunset without having to answer for their actions and deceits.

Ask yourself this: Is it likely our federal agencies would be so haughty about Congress and its subpoenas if Mr. Koskinen had been impeached?

So instead of whingy calls for another special counsel, a Congress that behaved as a branch of government coequal to the presidency would use its own powers to force oversight on resisting federal officials. Even if this might ultimately include impeaching FBI Director Christopher Wray.

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March 29, 2018 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Wednesday, March 28, 2018

Oei Presents Whose Tax Law Is It? Constituencies And Control In Statutory Drafting Today At Toronto

Oei (2018)Shu-Yi Oei (Boston College) presents Whose Tax Law Is It? Constituencies and Control in Statutory Drafting (with Leigh Osofsky (Miami)), 104 Iowa L. Rev. ___ (2018)), at Toronto today as part of its James Hausman Tax Law and Policy Workshop Series:

The 2017 tax reform produced legislation that many have derided as convoluted and unreadable, leading commentators to ask how such legislation came to pass. But there is little existing research about drafting practices that helps us contextualize such critiques.

In this Article, we conduct the first in-depth empirical examination of how drafters make tax law drafting decisions. We report findings from interviews with government counsels who participated in the tax legislative process over the past four decades. Our key finding was that the tax law is written for a small group of experts by a small group of experts: Most counsels did not consider statutory formulation or readability important, as long as substantive meaning was accurate. Many held this view because their intended audience was experts and software companies, not ordinary taxpayers or even Congress Members. When revising law, drafters preserve existing formulations so as to not upset settled expectations, even at the cost of increasing convolution. And the entire drafting process is controlled by a few tax law specialists, with little input on formulation decisions from Congress Members or other counsels.

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March 28, 2018 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Mann Presents How Do Corporate Tax Rates Affect Corporate Social Responsibility? Today In Australia

Mann (2018)Roberta Mann (Oregon) presents How Do Corporate Tax Rates Affect Corporate Social Responsibility?today at University of New South Wales:

A growing literature has developed on the topic of enforcement crowding out altruism. This literature may apply to the idea of corporate social responsibility. If the government requires social responsibility, by imposing a carbon price or by otherwise increasing tax liabilities to pay for social goods, does that reduce the corporate social response? Similarly, would reducing regulations and corporate tax liability increase the social response? The U.S. and Australia have significant differences in corporate taxation under 2017 law. Post-2017, the U.S. is moving closer to Australia in its corporate tax rate and also in its international tax system. In both the U.S. and Australia, corporations use tax strategies to reduce their effective tax rates (ETRs). Using a case study approach, we examine whether low corporate tax rates appear to encourage firms' investment in sustainability.

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March 28, 2018 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Pichhadze Presents Guide To Transfer Pricing: Lessons From Australia And New Zealand At Boston University

AdamAmir Pichhadze (Deakin Law School) presented Guide to Drafting and Interpreting Transfer Pricing Legislation: Lessons From Australia and New Zealand at Boston University yesterday as part of its Graduate Tax Program Speaker Series:

Countries around the world are undertaking legislative reforms in response to the OECD’s BEPS action plans. In his current research, part of which will be presented at the Boston University Law School’s Graduate Tax Program Lecture Series, Dr. Amir Pichhadze distills lessons from the legislative reform agenda which is currently undertaken by the New Zealand government and based on recent Australian case law.

As Pichhadze recently explained at the 30th Annual Australasian Tax Teachers Association, OECD member countries, as well as many non-member countries, have chosen to follow the OECD’s transfer pricing guidelines — an internationally coordinated relational (soft law) agreement on how to apply domestic transfer pricing laws.

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March 28, 2018 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Bar Pass Data Palooza

Following up on last week's post, 90% Of Students Pass The Bar Within 2 Years Of Graduation, But 10% Of Law Schools Have Fail Rates > 25%:  Law.com, Bar Pass Data Palooza: Here's a Look at First-Time Test Takers:

The University of Chicago Law School had the highest first-time bar pass rate in 2017, but Stanford Law School was the biggest overperformer when it came to topping statewide averages.

A wealth of bar passage data recently released by the American Bar Association provides the most comprehensive picture yet of which law schools’ graduates are acing the test, and which are struggling.

The ABA this year overhauled the timing and format of how it reports schools’ bar pass rates in a bid to get that information out to the public faster, and to make it easier to compare data across schools.

We’re taking a deeper dive into the numbers this week. To kick things off, we’re looking at the pass rates of law grads who took the bar exam for the first time in 2017—the most recent set of data.

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March 28, 2018 in Legal Education | Permalink | Comments (1)

Graetz Delivers Lecture On The 2017 Tax Cuts: How Polarized Politics Produced Precarious Policy Today At Temple

Graetz (2018)Michael J. Graetz (Columbia) delivers the 2018 Frank & Rose Fogel Lecture at Temple today at noon EST on The 2017 Tax Cuts: How Polarized Politics Produced Precarious Policy (livestream here):

In this lecture, Michael Graetz contends that the new tax law is unstable. This is hardly surprising because it was rushed through Congress in record time with only Republican votes and no ability for public comments on its changes. The new rules create significant new differences in tax burdens based on what kind of business is conducted, where goods and services are bought and sold, whether individual workers are employees or independent contractors, and where people live. Finally, although it was estimated to be a $1.5 trillion tax cut over ten years, it's actual cost is likely to be double that amount, producing unsustainable annual deficits and an unacceptable level of public debt.

March 28, 2018 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Find The Right Law School For A Tax Law Career

U.S. News & World Report, Find the Right Law School for a Tax Law Career:

Aspiring tax lawyers should target law schools where a significant proportion of recent alumni have tax law jobs, experts say.

Experts say aspiring tax lawyers who worry about whether they have the correct college major to get a job in the field should take comfort in the fact that their major doesn't matter.

"You don’t have to have an accounting degree to become a tax attorney, and in my opinion, you don’t even have to have a head for numbers," says Wayne Wilson, practice chair of the tax, benefits and wealth planning group at Dinsmore & Shohl LLP, a corporate law firm with offices in multiple U.S. cities. "It’s really just a matter of legal theory."

Although your college major won't determine whether you can have a tax law career, one thing which does influence your ability to pursue that career is whether you take tax law courses during law school, Wilson says. He says tax law employers are more likely to hire law school graduates with tax law courses on their transcripts.

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March 28, 2018 in Legal Education, Tax | Permalink | Comments (8)

Johnson: Why Do We Teach?

JohnsonTaxProf Blog op-ed:  Why Do We Teach?, by Steve R. Johnson (Florida State):

Allow me to recount an incident, at first seemingly unrelated, that may shed light on our choice to be teachers.

I am a quite pedestrian chess player. But the desire to grow is inherent in every sentient being. One recent Sunday morning, I was reviewing a 1938 chess game published with annotations in a 2011 book.

At move 13, White made a choice that soon led to his loss of a pawn, but it was a sacrifice, not a blunder. The commentator explained the move in only general terms, but his sparse words parted the veil of my igno rance. After an hour of study, I grasped how White's sacrifice at move 13 enabled White to effect an advance — prepared on moves 14 to 18, executed on moves 19 to 29, and culminated by another sacrifice on move 30 that forced a win on move 41.[Fn.1]

So why do we teach? Donne underscored the eternal truth that none of us exists independen tly of the rest of humanity.[Fn.2]  Newton reminded us that the range of our vision depends in large measure on that of our predecessors.[Fn.3]  In short, both existentially and expedientl , we are and must be part of a web of intellectual and emotional connection.

So why do we teach? Through teaching we affirm and strengthen our connections to both our past and our future.

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March 28, 2018 in Legal Education | Permalink | Comments (0)

Pols Use Economics The Way Drunks Use Lampposts

Wall Street Journal op-ed:  Pols Use Economics the Way Drunks Use Lampposts, by Alan S. Blinder:

The economy keeps chugging along. But beneath the surface economic policy makers are digging tunnels that could cave in.

By 2020, higher spending and tax cuts will push the federal budget deficit above 6% of gross domestic product—higher than it ever was in the Reagan years. Even deficit doves like me think that’s far too high absent a recession. President Trump may be taking the U.S. into a multifront trade war, against the advice of almost all economists. And America’s political leaders refuse to enact a carbon tax, the remedy for climate change that almost every economist favors.

Cases like these, in which the political system chooses virtually the opposite of what most economists recommend, are neither random nor rare. They exemplify what I call the Lamppost Theory of Economic Policy: Politicians use economics the way a drunk uses a lamppost—for support, not illumination. The Lamppost Theory is a source of unending frustration to economists, but its real harm comes when it leads the nation into terrible economy policies.

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March 28, 2018 in Tax | Permalink | Comments (0)

Tuesday, March 27, 2018

Jones Presents How Do Distributions From Retirement Accounts Respond To Early Withdrawal Penalties? Today At NYU

HarrisDamon Jones (Chicago) presents How Do Distributions from Retirement Accounts Respond to Early Withdrawal Penalties? Evidence from Administrative Tax Returns (with Gopi Shah Goda (Stanford) & Shanthi Ramnath (U.S. Treasury Department, Office of Tax Analysis)) at NYU today as part of its Tax Policy Colloquium Series hosted by Lily Batchelder and Daniel Shaviro:

The design of retirement savings accounts must balance the long-term goal of retirement wealth accrual with the potential need for liquidity. Penalties (and exceptions) on pre-retirement withdrawals provide a possible lever for striking this balance. In the United States, penalties amount to 10 percent of withdrawn funds and several exceptions are available, including partial or full exemptions for the unemployed, disabled, or those incurring unreimbursed medical expenses. In this paper, we investigate how individuals respond to the removal of the 10 percent penalty imposed on Individual Retirement Account (IRA) withdrawals prior to the account holder turning 59 1/2. Our analysis employs rich tax records from the Internal Revenue Service (IRS) and develops new empirical techniques which allow us to use annual data to better understand patterns at higher levels of frequency. We find a large increase in withdrawals upon reaching age 59 1/2, implying an 80 percent increase in annual withdrawals on average among our population.

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March 27, 2018 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Thomas Presents Taxing The Gig Economy Today At Georgetown

Thomas (2017)Kathleen Delaney Thomas (North Carolina) presents Taxing the Gig Economy, 166 U. Pa. L. Rev. ___ (2017), at Georgetown today as part of its Tax Law and Public Finance Workshop Series hosted by Lilian Faulhaber and Itai Grinberg:

Due to advances in technology like mobile applications and online platforms, millions of American workers now earn income through “gig” work, which allows them the flexibility to set their own hours and choose which jobs to take. To the surprise of many gig workers, the tax law considers them to be “business owners,” which subjects them to onerous recordkeeping and filing requirements, along with the obligation to pay quarterly estimated taxes. This Article proposes two reforms that would drastically reduce compliance burdens for this new generation of business owners, while simultaneously enhancing the government’s ability to collect tax revenue.

First, Congress should create a “non-employee withholding” regime that would allow online platform companies such as Uber to withhold taxes for their workers without being classified as employers. Second, the Article proposes a “standard business deduction” for gig workers, which would eliminate the need to track and report business expenses.

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March 27, 2018 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Savannah Law Students File Class Action Claiming School Deflated Grades So They Would Lose Their Conditional Scholarships

SavannahFollowing up on last week's post, Savannah Law School Sells Building, To Close After Spring 2018 Semester:  ABA Journal, Class Action Claims Closing of Savannah Law School Is Intended to Benefit Parent School's Finances:

A would-be class action lawsuit filed on behalf of Savannah Law School students claims the school is being closed to financially benefit its parent school and to improve the parent school's position before the ABA's accreditation body.

The suit was filed Friday against the Savannah Law School and Atlanta’s John Marshall Law School, which operates the Savannah school as a branch campus. Savannah Law School notified students and faculty March 21 that the Savannah campus would close at the end of the spring semester, and the law school building had been sold.

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March 27, 2018 in Legal Education | Permalink | Comments (0)

WSJ: New Tax On Overseas Earnings Hits Unintended Targets

Wall Street Journal, New Tax on Overseas Earnings Hits Unintended Targets:

A new tax aimed at overseas income earned by U.S. technology and pharmaceutical firms is hitting unexpected places. ...

In the past, the U.S. taxed corporate profits earned overseas at the domestic rate of 35%. Companies could avoid that tax by booking their income overseas and keeping it there. The new system in theory aims to lighten the overseas tax burden and target it more carefully.

Congress set a minimum tax known as GILTI, for Global Intangible Low-Taxed Income, of roughly 10.5% on a portion of corporate income earned overseas. GILTI is directed at trademarks and patents of technology and pharmaceutical firms, which are easy to transfer to low-tax foreign countries. It was supposed to create a floor on taxing those highly mobile profits, an assurance that companies would pay something while stopping short of the full U.S. tax rate. Without it, lawmakers worried, U.S. companies could have an even larger incentive to move intangible assets and profits offshore. ...

GILTI is hitting ... companies ... because of the way the new tax interacts with other provisions in the tax code, specifically the treatment of foreign tax credits that are supposed to prevent two countries from taxing the same income. When companies calculate the credits they receive for paying taxes overseas, the law typically requires them to assign some of their domestic expenses to foreign jurisdictions. The result for some companies is that, for U.S. tax purposes, their foreign income and foreign taxes look smaller than they actually are, shrinking their credits. That, in turn, could force them to pay the new minimum tax on top of their foreign tax bills.

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March 27, 2018 in Tax, Tax Policy in the Trump Administration | Permalink | Comments (0)

Everyone Tries To Dodge The Tax Man, And It Keeps Getting Easier

538 (2015)FiveThirtyEight, Everyone Tries To Dodge The Tax Man, And It Keeps Getting Easier:

The bipartisan flirtation with avoiding taxes, through both legal and illegal means, threatens a tax system that is already bringing in historically low levels of revenue and that pays for everything from social security to military preparedness. Three foes in particular are enabling tax dodgers, making their ploys more common and more damaging: reduced support for the IRS, new incentives for people to become cheaters and widening partisan distrust.

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March 27, 2018 in IRS News, Tax | Permalink | Comments (3)

Allard: 'The Lawyer’s Muscle — The Brain— Is The Greatest Tool Known To Man'

Nick Allard (Dean, Brooklyn), Awaken to the Future of Law:

“The study of the law is useful in a variety of points of view,” Thomas Jefferson wrote in 1790 to his son-in-law, Thomas Mann Randolph Jr., adding that it qualifies a person to be useful to oneself, to neighbors and to the public. Randolph’s interests, like Jefferson’s, spanned fields as diverse as botany, the classics and politics, and both were outstanding lawyers.

Today in 2018, anyone thinking about how their future life’s work might be worthwhile, satisfying and make a positive difference would do well to heed Jefferson’s words and consider how studying law can advance that ambition for a remarkably broad spectrum of people — and to a range of purposes unimaginable even to our third president, who was a true genius.

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March 27, 2018 in Legal Education | Permalink | Comments (0)

Containing Systemic Risk By Taxing Banks Properly

Mark Roe (Harvard) & Michael Troege (ESCP Europe), Containing Systemic Risk By Taxing Banks Properly, 35 Yale J. on Reg. ____ (2018):

Tax specialists normally don’t focus on financial stability and financial regulators and analysts typically do not focus on taxes. This is too bad because the corporate tax structure affects financial stability and does so significantly, as we analyze in this article.

The reason is simple: tax rules influence the capital structure choices of corporations in general and banks in particular, by allowing tax benefits to debt—principally the deductibility of interest—that equity lacks. Today, the corporate tax penalizes equity finance and subsidizes debt relative to equity. As a consequence, corporations overall use more debt than they would in a tax-neutral world.

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March 27, 2018 in Scholarship, Tax | Permalink | Comments (0)

Charges Consolidated For Katherine Magbanua (Mother Of Hit Man's Children, Worker In Adelson Dental Practice) In Murder Of Dan Markel

MagnaubaTallahassee Democrat, Charges Consolidated for Magbanua:

Charges were consolidated against the woman accused of being a conduit between Dan Markel’s former in-laws and the hitmen investigators say shot him in his garage.

Charges of first-degree murder, conspiracy and solicitation of murder were brought together into one case against 33-year-old Katherine Magbanua on Tuesday. She has pleaded not guilty to the charges.

Magbanua is accused of helping to orchestrate the July 2014 murder of Markel, an esteemed Florida State law professor.

She is one of three people charged in Markel’s death, which investigators say was a murder for hire paid for by Markel’s former in-laws. Sigfredo Garcia, the 35-year-old father of two children with Magbanua, is also charged with first-degree murder, conspiracy and solicitation of murder. Magbanua enlisted Garcia, who brought on his childhood friend Luis Rivera to drive from Miami to Tallahassee in a rental car to shoot Markel, Tallahassee police say. ...

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March 27, 2018 in Legal Education | Permalink | Comments (0)

Monday, March 26, 2018

Kleinbard Delivers Lecture On Fiscal Policy In An Age Of Inequality Today At BYU

Kleinbard (2015)Edward D. Kleinbard (USC) delivers the annual Bruce C. Hafen Lecture today on What’s a Government Good For?: Fiscal Policy in an Age of Inequality at BYU today:

The debate surrounding the Tax Cuts and Jobs Act demonstrated the intellectual bankruptcy of U.S. fiscal policy debate. The TCJA has serious flaws as a matter of narrow tax policy, but it is more fundamentally flawed when viewed through the proper policy lens, which is overall fiscal policy – the net of government taxing and spending. The TCJA greatly exacerbates already untenable budget deficits. Its tax prescriptions are even more regressive when the spending cuts contemplated by the legislation itself are reflected. And the law’s regressivity is compounded further when plausible financing paths for these large deficits are included in the analysis. In particular, the “dynamic” growth analysis whose tax ramifications were part of the debate leading up to the law was predicated on enormous cuts to future transfer payments, and confused GDP growth with enhanced welfare.

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March 26, 2018 in Colloquia, Scholarship, Tax | Permalink | Comments (1)

Ring Presents Leak-Driven Law Today At UC-Irvine

Ring (2017)Diane Ring (Boston College) presents Leak-Driven Law, 65 UCLA L. Rev. __ (2018) (with Shu-Yi Oei (Boston College)), at UC-Irvine today as part of its Tax Law and Policy Colloquium Series hosted by Omri Marian:

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

The conventional wisdom is that data leaks enable tax authorities to detect and punish offshore tax evasion more effectively, and that leaks are therefore socially beneficial from an economic welfare perspective. This Article argues, however, that the conventional wisdom is too simplistic.

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March 26, 2018 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Repetti Presents Tax Rates, Efficiency and Inequality Today At BYU

Repetti (2018)James R. Repetti (Boston College) presents Tax Rates, Efficiency and Inequality at BYU today as part of its Tax Policy Colloquium Series hosted by Cliff Fleming and Gladriel Shobe:

Traditionally, the great democracies of the western world assigned equal weight to distributive justice and economic efficiency in designing a tax system. In the past few decades, however, economic efficiency has dominated the debate about the best design of a tax system in politics and in analysis by legal academics. Discussions of progressive tax rates often focus on the adverse efficiency effects of high rates while ignoring benefits arising from a progressive rate structure’s reduced burden on lower income individuals. For example, many advocate low tax rates on investment income to reduce the efficiency effects of taxing savings.

In an attempt to increase efficiency, individual tax rates have decreased over the past 60 years. In 1956, the maximum statutory tax rate was 91%. Currently, the maximum tax rate is 37%. At the same time that tax rates were reduced, inequality increased, fueled in part by the declining tax rates.

There are several explanations for the intense focus on efficiency.

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March 26, 2018 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Boston College-Tulane Tax Roundtable

BC TulaneBoston College hosted the annual Boston College-Tulane Tax Roundtable on Friday:

James Alm (Tulane), Is the Haig-Simons Standard Dead? The Uneasy Case for a Comprehensive Income Tax
Discussant: Rebecca Kysar (Brooklyn)

Thomas Brennan (Harvard), Debt and Equity Taxation: A Combined Economic and Legal Perspective
Discussant: James Repetti (Boston College)

Heather Field (UC Hastings), Tax Lawyers as Tax Insurance
Discussant: Natalya Shnitser (Boston College)

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March 26, 2018 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Lesson From The Tax Court: Why Labor Is Not Deductible, Or, Love’s Labor Lost

Tax Court (2017)I mow my own lawn. Most of the other houses in my neighborhood pay a lawn service to do that. But I’m too cheap to pay someone $40 to do what I can do perfectly well. To some economists, my act of mowing my own lawn is income to me. As the great economist Benjamin Franklin might say, the $40 saved is $40 earned. Thank goodness I do not have to count that imputed income as gross income!

The point is that my labor may have a market value. I could go into the lawn care business and others would pay. But until I actually get paid, how do you know whether my labor is worth $40 or $35 or $45? And when I labor instead at my desk at Tech Law, my labor is rewarded with a decent salary. But does the fact that I get paid for my labor mean that when I perform labor above and beyond—such as writing this blog post for example—such uncompensated labor is an expense? Have I “incurred” an expense that, if performed in the carrying on of my trade or business, is deductible under §162? That is the question posed by the case of James Edward Bradley Jr. and Margaret Letitia Hayes-Hunter v. Commissioner, T.C. Summary Op. 2018-13 (Mar. 19, 2018). There, Judge Panuthos teaches a seemingly simple lesson: a taxpayer may not deduct the value of the uncompensated labor they put into their business. Unpaid labor is not deductible.  Underneath this seeming simplicity, however, lies some interesting complexities.

More below the fold.

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March 26, 2018 in Bryan Camp, New Cases, Tax | Permalink | Comments (2)

Pepperdine Is #1 In ADR, #8 In Practical Training

U.S. News 2019For the thirteenth time in fourteen years, Pepperdine Law School's Straus Institute has been ranked the #1 dispute resolution program in the country by U.S. News & World Report. Congratulations to Tom Stipanowich and Sukhsimranjit Singh and their Straus faculty and staff colleagues for this well deserved recognition of the amazing academic programs and training and conferences they offer.

In addition, Pepperdine has been named the eighth best law school for practical training by preLaw (Spring 2018):

This year, 10 schools earned an A+ in our annual study. PreLaw ranks the schools by analyzing their clinic, externship and simulation offerings, as well as their students’ participation in moot court, pro bono work and other innovative programs.

PT

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March 26, 2018 in Law School Rankings, Legal Education | Permalink | Comments (0)

Shaviro: Evaluating The New U.S. Pass-Through Rules

Daniel Shaviro (NYU), Evaluating the New US Pass-Through Rules, 2018 British Tax Rev. 49:

The pass-through rules that the US Congress enacted in 2017 — permitting the owners of unincorporated businesses in favored industries to escape tax on 20 per cent of their income — achieved a rare and unenviable trifecta, by making the tax system less efficient, less fair, and more complicated. It lacked any coherent (or even clearly articulated) underlying principle, was shoddily executed, and ought to be promptly repealed.

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March 26, 2018 in Scholarship, Tax | Permalink | Comments (1)

TaxProf Blog Weekend Roundup

Sunday, March 25, 2018

More On Pepperdine's Place In The 2019 Law School Rankings

U.S. News 2019Updated:  Following up on last week's post, Pepperdine's Place in the Law School Rankings:

National Law Journal, Berkeley Law Returns to the U.S. News' Top 10, Pepperdine Gets Shut Out:

The closely watched law school rankings offer few surprises this year, save for a decision to temporarily delist Pepperdine University School of Law for an data reporting mistake. ...

This year’s list has a little extra controversy.

U.S. News removed Pepperdine University School of Law from the ranking after the school reported a mistake in the median LSAT score it provided to the publication. According to Pepperdine law dean Paul Caron, the school last week realized that it had incorrectly reported its median LSAT score as 162 instead of the correct 160 when it saw the early embargoed version of the rankings that U.S. News provides each school for review. (The initial ranking had Pepperdine moving up from No. 72 to No. 59.)

Rather than recalculate the school’s rank and issue a new list prior to the official release, as the Caron requested, U.S. News removed Pepperdine’s ranking altogether.

“It is, of course, deeply disappointing to be unranked for a year,” Caron wrote in a post on his Tax Prof Blog. “But the reality is that we made great progress in the rankings this year, and should continue our ascent next year.”

Caron said several experts concluded that Pepperdine would have ranked 62nd or 64th using the correct median LSAT.

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March 25, 2018 in Law School Rankings, Legal Education | Permalink | Comments (4)

Wells:  Get With The BEAT

Bret Wells (Houston), Get With the BEAT, 158 Tax Notes 1023 (Feb. 18, 2018):

The United States, Europe, and a host of other nations have been grappling with the BEPS phenomenon for several years. The efforts have been fragmented and in some instances, chaotic. With the enactment of section 59A, the United States has taken a bold and decisive step toward protecting the U.S. tax base against inbound profit-shifting strategies. The BEAT protects the nation’s tax base by ensuring that the United States maintains its source country right to a 50-50 profit-split outcome, thus limiting the efficacy of excessive base erosion strategies. This outcome is consistent with existing U.S. treaty obligations, and other trading partners should consider adopting this unilateral approach in their own jurisdictions.

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March 25, 2018 in Scholarship, Tax | Permalink | Comments (0)

After Retiring From The IRS At 58, Dorothy Steel Started Acting At 88 And Hit It Big At 92 In 'Black Panther'

SBPWashington Post, She Started Acting at 88. Four Years Later, She’s Recognized Everywhere for ‘Black Panther.’:

Dorothy Steel’s mind was made up. She had only been acting for three years and didn’t want to audition for some “comic strip” movie she had never heard of. At 91, Steel told herself there was no way she could learn how to speak with an African accent that the role required.

In late November 2016, Steel asked her agent to kindly decline the invitation, and went about her day.

When her 26-year-old grandson, Niles Wardell, called, Steel casually mentioned the offer. Wardell was stunned. This is not just comics, he told his grandmother, this is “Black Panther.” This is a big deal. When she still wasn’t convinced, he decided to turn the tables on the woman who has been his source of wisdom.

“My grandson said to me, ‘You’re always talking about stepping out on faith. I either want you to man up or shut up,’ ” Steel recalled, laughing at the memory.

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March 25, 2018 in IRS News, Tax | Permalink | Comments (0)

The Sham National Search

ChronicleChronicle of Higher Education, The Professor Is In: The Sham National Search:

We’re in the process of hiring a new faculty member right now and everyone in the department (and everyone in the administration) knows that it’s basically a sham search. There is an inside candidate, and the job ad was written specifically for them. But of course we have the other finalists coming to campus, and everyone in the department is expected to do all the things you would expect — go to the job talks, the teaching demos, and the dinner meetings.

It seems like such a waste of everyone’s time, and I feel bad for the candidates who think they actually have a shot at this job. Is all this really necessary?

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March 25, 2018 in Legal Education | Permalink | Comments (5)

The Top Five New Tax Papers

SSRN LogoThere is quite 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 #3, #4, and #5:

  1. [438 Downloads]  Choice-of-Entity Decisions Under the New Tax Act, by Bradley Borden (Brooklyn)
  2. [293 Downloads]  The Elephant Always Forgets: U.S. Tax Reform and the WTO, by Reuven Avi-Yonah (Michigan) & Martin Vallespinos (S.J.D. 2018, Michigan)
  3. [248 Downloads]  Explaining Choice-of-Entity Decisions by Silicon Valley Start-Ups, by Gregg Polsky (Georgia)
  4. [217 Downloads]  The Impact of the 2017 Act's Tax Rate Changes on Choice of Entity, by Jim Repetti (Boston College)
  5. [197 Downloads]  Country-by-Country Reporting and the International Allocation of Taxing Rights, Michelle Hanlon (MIT)

March 25, 2018 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

Saturday, March 24, 2018

This Week's Ten Most Popular TaxProf Blog Posts

Galle: Mistaken Precedent And The Meaning Of 'Gift'

Brian Galle (Georgetown), Can I Return This? Mistaken Precedents and the Meaning of “Gift”:

What happens when the Supreme Court gets its own precedents wrong? And not in the new Roberts-court “anxiety of influence” style, where the Court deliberately misreads an old case in order to avoid admitting that it is overruling that case. I mean, what if the Court says that it aims to continue a prior interpretation, but its description of that old practice is inaccurate? Which law governs in the next case? If that is too hard to think about in the abstract, consider the law of gifts.

Most tax students can tell you that a transfer is a “gift” that can be excluded from income if it is given out of “detached and disinterested generosity” (DADG). This is a curious rule. Say Jared works for his father-in-law. When Jared receives a $1,000 check from FIL Don on his anniversary, which happens to also be the anniversary of his employment, does he have income, or not? Worse, say that Stormy works in a trade in which she often has intimate relations with others for money. She strikes up a friendly conversation with a client and they agree to meet again for drinks, where he pays. Income? From a tax policy perspective, these questions are nonsense: as Henry Simons argued, all gifts are income, because “ability to pay” depends on your resources, not their source.

For all that the DADG standard looks indefensible as a policy approach, it seems required by the Supreme Court’s decision in the famous Dubersteincase. But what if I told you that everything you learned in your Federal Income Tax course (about Duberstein) was wrong?

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March 24, 2018 in Scholarship, Tax | Permalink | Comments (4)

Wax: The University Of Denial — Aggressive Suppression Of The Truth Is A Central Feature Of American Higher Education

Following up on my previous posts (links below):  Wall Street Journal op-ed:  The University of Denial: Aggressive Suppression of the Truth is a Central Feature of American Higher Education, by Amy Wax (Pennsylvania):

Somewhere deep in a file drawer, or on a computer server humming away in a basement, are thousands upon thousands of numbers, with names and identities attached. They’re called grades. They represent an objective reality, which exists independent of what people want reality to be. They sit silently, completely indifferent to indignation, angry petitions, irritable gestures, teachers’ removal from classrooms—all the furor and clamor of institutional politics.

Those numbers are now solely within the control of the individual students who earn them and the educational institutions that generate them—powerful entities ruled by bureaucracies that serve as gatekeepers to privileged positions in our society. They are jealously guarded, protected by cloaks of confidentiality and secrecy. But they are what they are. Hiding facts is not the same as changing them. ...

The problem is that students, including law students, go out into the real world. They are hired, paid and expected to perform, and their actions have real consequences for others. Whether we like it or not, grades help predict future performance. Some social actors acknowledge this, implicitly or overtly. As a law professor, I observe, for example, that federal judges unapologetically select clerks based on academic record and rank, and that elite law firms are also highly grade-conscious.

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March 24, 2018 in Legal Education | Permalink | Comments (15)