Paul L. Caron
Dean
Pepperdine Caruso
School of Law
David Cay Johnston (left) delivered the Fourteenth Annual David R. Tillinghast (right) Lecture on International Taxation on Faux Firms and Fairness: Taxing Capital, Trade, and Production in a Global Economy at NYU:
Johnston argued that government acquiescence in self-dealing transactions and foreign tax havens subverts revenue collection efforts to the detriment of the middle and lower classes in the United States.
To listen to the lecture, see here.
The Select Revenue Measures Subcommittee of the House Ways & Means Committee holds a hearing today on Revitalizing Distressed Communities. From the hearing announcement:
The Empowerment Zones and Enterprise Communities program was established by the Omnibus Budget Reconciliation Act of 1993 (P.L. 103-66).
The Community Renewal Act of 2000 (P.L. 106-554) further expanded the program, creating new Renewal Communities not covered under the prior program. Businesses that locate within these zones may receive tax benefits, including employment credits for hiring workers from the designated area, expensing for certain capital purchases, and tax-exempt financing, among other tax and non-tax benefits. The communities are targeted based on pervasive poverty, economic stagnation, and high unemployment. Communities are nominated by state and local governments and selected based on a competitive process, which includes a review of commitments by the state and local governments to attract business and new investment.
While the programs are due to expire at the end of 2009, President Obama requested that Congress extend these programs for one year in the Fiscal Year 2010 budget.
Here are the witnesses scheduled to testify:
In connection with the hearing, the Joint Committee on Taxation has released Incentives for Distressed Communities: Empowerment Zones and Renewal Communities.
Midtown Manhattan steakhouse Maloney & Porcelli provides a dubious Expense-a-Steak web tool. As the Wall Street Journal explains:
The premise is simple: enter the amount of your restaurant bill, click “EXPENSE IT!”, and the program automatically generates a print-ready page of fake receipts for work-related expenses like office supplies and cab fare totaling the same amount — so power-lunchers can enjoy their steak frites without drawing the boss’s ire.
See also Dealmaker. (Hat Tip: Jonathan Stein.)
The Treasury Inspector General for Tax Administration yesterday released Higher Than Planned Call Demand Reduced Toll-Free Telephone Access for the 2009 Filing Season (2009-40-127):
During the 2009 Filing Season, 75.7 million total dialed attempts were made to the IRS toll-free telephone lines. Through automation and assistors, the IRS answered 35.8 million (47.3%) calls during normal hours of operation. However, 22.4 million calls were not answered during normal hours of operation because the taxpayers hung up, were courtesy disconnected5 by the IRS, or received a busy signal. IRS officials stated that the 22.4 million calls included calls from taxpayers who called back and received service, dialed the IRS repeatedly, or hung up for reasons outside the IRS’ control. The IRS experienced high call demand during the last two filing seasons. Nevertheless, even when the IRS achieves more than an 80% Level of Service, millions of calls are not answered by IRS assistors.
Katherine Lim & Jeffrey Rohaly have posted The Individual Alternative Minimum Tax: Historical Data and Projections on the Tax Policy Center website. Here is the abstract:
The AMT, which originally targeted high-income taxpayers, requires annual legislation to prevent it from affecting millions of middle-income individuals each year. There are two primary reasons for the AMT's broadening impact; its parameters are not indexed for inflation and the 2001-2006 tax cuts reduced regular tax liability without changing AMT liability. In 2009, four million taxpayers will pay $33.5 billion in AMT, but without congressional action that number will rise to 27 million owing $102 billion in 2010. This paper describes the AMT and provides TPC's latest estimates of AMT coverage, revenue, and distribution.
Inside Higher Ed reviews Wannabe U: Inside the Corporate University (University of Chicago Press, 2009), by Gaye Tuchman (University of Connecticut, Department of Sociology):
The book contains a discussion of the way faculty members look down on those who lead the university's divisions and colleges, viewing them as "corporate administrators" and not scholars. The professors check out the publication records of new administrators and gossip about how sparse or old they are. "When he wants to discuss research, he has to talk about his dissertation. He apparently hasn't done any research since then," quips a faculty member of one administrator. Another says of an administrator: "I don't know how many times I have heard him mention that he is a biologist. It's as though he mentions his field when he talks to [a group of faculty leaders] so that we will know he is intelligent." …
In her concluding chapter, she calls Wannabe "a conformist university," with an emphasis on "doing what must be done to elbow its way up the rankings." She writes that the administration is imposing "an accountability regime" on faculty members. And she notes that while professors still have much more freedom than most American employees, "as the decades pass, working at a university will become more and more like working in the corporate world" and administrators will be hired for their ability to carry out corporate-style management. (While the book's barbs tend to find administrators as targets, it also criticizes professors, particularly for their lack of interest in teaching issues as compared to research agendas.)
The examples in the book portray an administration much more concerned with making the university look outstanding than actually becoming outstanding. And measures that Tuchman writes are of dubious value (U.S. News & World Report rankings, for example) appear to count much more than the vibrancy of intellectual life or the student learning experience. …
An abundance of evidence points to Wannabe's identity as UConn, Tuchman's employer.
Dow Jones, IRS Would Play Starring Role In Health-Care Overhaul, by Martin Vaughan:
The IRS would emerge bigger and with even wider reach under the health care bills pending in Congress.
The IRS would be in charge of ensuring individuals purchase health insurance, under leading House and Senate plans. It would collect penalties from large companies that don't offer insurance to their employees. And it would assist state officials in administering tax credit subsidies for the purchase of health insurance.
The bill headed for approval by the Senate Finance Committee by next week includes no fewer than 17 provisions that would add new duties for the IRS, according to Sen. Charles Grassley, R-Iowa. "I am very concerned about…the unprecedented role of the [IRS] in implementing a social program that has nothing to do with the IRS's primary mission of collecting taxes," Grassley wrote last week in a letter to Treasury Secretary Timothy Geithner.
The Princeton Review has published the 2010 edition of The Best 172 Law Schools (with the University of Cincinnati College of Law on the cover):
We surveyed more than 18,000 students at 172 law schools, in addition to collecting data from school administrators, to create 11 ranking lists:
Best Classroom Experience: Based on student assessment of professors' teaching abilities and recognition in their fields, the integration of new business trends and practices in the curricula, and the intellectual level of clasmmates' contributions in course discussions.
Best Quality of Life: Based on student assessment of: whether there is a strong sense of community at the school, how aesthetically pleasing the law school is, the location of the law school, the quality of the social life, classroom facilities, and the library staff.
Best Career Prospects: Based on the Career Rating.
Best Professors: Based on the Professors Interesting and Professors Accessible Ratings.
Most Diverse Faculty: Based on the percentage of the law school faculty that is from a minority group and student assessment of whether the faculty makes up a broadly diverse group of individuals.
Most Competitive Students: Based on law student assessment of how competitive classmates are, how heavy the workload is, and the perceived academic pressure.
Most Liberal Students: Based on student assessment of the political bent of the student body at large.
Students Lean to the Right: Based on student assessment of the political bent of the student body at large.
Best Environment for Minority Students: Based on the percentage of the student body that is from underrepresented minorities and student assessment of whether all students receive equal treatment by fellow students and the faculty, regardless of ethnicity.
Most Chosen by Older Students: Based on the average age of entry of law school students and student reports of how many years they spent out of college before enrolling in law school.
Toughest to Get Into: Based on the Admissions Selectivity Rating.
Unfortunately, the Princeton Review did not release the response rate per school, so it is impossible to determine how the rankings are affected by each school's representation among the respondents.
For discussion of the rankings, see:
For prior Princeton Review Law School Rankings, see:
Samuel D. Brunson (Loyola-Chicago) has posted Taxing Investment Fund Managers Using a Simplified Mark-to-Market Approach on SSRN. Here is the abstract:
For several years, a debate has swirled around the taxation of hedge fund managers’ compensation. Because it is structured as a type of partnership interest in the hedge fund, hedge fund managers may be eligible to pay taxes at lower capital gains rates on a large percentage of their income from the fund, which seems intuitively unfair. Until now, the debate has generally revolved around whether this compensation, called “carried interest,” is more like compensation, taxable at a 35% rate, or is more like an investment return, taxable at a 15% rate. And, because strong arguments support analogizing carried interest to both compensation and investment income, there is no clear resolution to the debate.
This Article argues that asking what carried interest most resembles is the wrong question. Instead, it asks whether the policy considerations employed to justify taxing capital gains at lower rates apply equally to carried interest. Because those policy considerations do not strongly support taxing carried interest at lower rates, it is not necessary to determine what carried interest most resembles. Moreover, taxing hedge fund managers’ receipt of carried interest using a simplified mark-to-market approach better solves the problems that weakly justify taxing carried interest at lower rates better than the lower rates solve the problems.
Mark-to-market taxation provides the best representation of economic income. Because of liquidity and valuation concerns, however, the tax law generally requires realization before imposing tax. Carried interest does not present these liquidity or valuation problems, however, and can and should be taxable on a mark-to-market basis.
TaxProf Blog delivers timely, insightful coverage of tax law and legal education to inform, connect, and inspire scholars, practitioners, and students.
