Paul L. Caron
Dean
Pepperdine Caruso
School of Law
Monday, May 31, 2004
There is a lot of tax scholarship questioning the long-term effectiveness of state and local tax incentives to attract and keep business. (For some notable examples, see here, here, and here). Recent news reports out of Denver also question the practice. (Thanks to reader Ben Cunningham for the tip.)
Sunday, May 30, 2004
SSRN has resolved its technical problems, and there are three new entries in our weekly list of Top 5 Tax Paper Downloads:
1. Corporate Tax Avoidance and High Powered Incentives by Dhammika Dharmapala (Connecticut – Economics Department) & Mihir Desai (Harvard Business School)
2. The New Dividend Puzzle by William Bratton (Georgetown)
3. Masking Redistribution (or its Absence) by Jonathan Baron (Penn – Wharton) & Edward McCaffery (USC)
4. Evidence of Differing Market Responses to Meeting or Beating Targets Through Tax Expense Management by Cristi Gleason (Iowa – Dep’t of Accounting) & Lillian Mills (Arizona – College of Business & Public Administration)
5. Keeping Two Sets of Books: The Relationship Between Tax & Incentive Transfer Prices by Charles Hyde (Unviersity of Melbourne) & Chongwoo Choe (Australian Graduate School of Management)
Sunday, May 30, 2004
Richard Gershon (Dean, Charleston) has published Teaching Federal Income Taxation Using Socioeconomics, 41 San Diego L. Rev. 401 (2004). Here is the Introduction:
I have very fond memories of sitting around the dining room table at my mother’s house in Atlanta, Georgia, and enjoying Shabbat dinner. My older brother had recently become a physician, much to the delight of my father, who was also a doctor. The two of them would eagerly discuss everything from the development of new medical techniques to the business of their profession. It was in these discussions that I had my first introduction to the applications of socioeconomic theory to tax law. I remember my brother saying that he was going to spend money on something he did not need so that he could take a deduction. Economically, he would have been better off keeping his money and paying his taxes, but his reason for making his decision was that he “did not want the government to have the money.”
Clearly, my brother’s behavior could not have been predicted merely by assessing what was in his best economic interest. Instead, his actions reflected his own beliefs and expectations regarding the nature of the federal tax system. This, in many respects, is a classic example of why it is important to incorporate socioeconomics into the teaching of federal income taxation. Students need to understand that the study of tax is not a study of pure economics, but instead involves many factors. Understanding those factors can better help them to read and apply the Internal Revenue Code (Code) and the Treasury regulations interpreting it. Accordingly, this Article gives examples for using socioeconomic theory to teach taxation.
Sunday, May 30, 2004
I saw The Day After Tomorrow with my 13-year old son. It is one of those movies that is so cheesy that, if you are in the right mood, can be a lot of fun. My favorite line was when Dennis Quaid’s son and others are trying to survive the coming ice age in the New York City Public Library. They need to burn books in the fireplace to generate heat and start quarreling over which books to torch. One character wants to preserve Nietzsche. Another wants to preserve the Gutenberg Bible. But all agree that the tax law books are a good beginning for the bonfire!
Saturday, May 29, 2004
Darryll Jones, Associate Dean and Associate Professor of Law at Pittsburgh, begins his web page with the following quote:
Neophytes, to whatever field of endeavor, invariably seek or receive advice from those who have come before. As a new attorney in the Army–an environment of waning machismo, fortunately–I was the surprised and fortunate recipient of this advice: ‘To be a good attorney, one must become a Renaissance man.’ It struck me years later what the advisor meant. One must stimulate and nurture a broad range of intellectual understanding; law and life are so much more than the application of rule to fact. The law is poetry and science, intuition and objectivity, and only men and women of the Renaissance mind can appreciate, practice and profess its artistic and scientific nuances. Indeed, legal education is the ultimate arts and science curriculum. I might add, in closing, that the study of taxation is the ultimate liberal arts and science course in that most exciting of arts and sciences curricula.
Professor Jones has proven himself to be a true tax Renaissance man in the past year, as he has pioneered two important projects that will have profound effects on the tax community for years to come.
With his colleagues Anthony Infanti and James Flannery, he started the Pittsburgh Tax Review, which recently published its inaugural issue. Tax Profs who have long bemoaned the dearth of specialized tax law reviews should embrace this new outlet for our work. The first issue is quite strong, with these major pieces:
• Richard Kovach,A Seldom Considered Aspect of Tax Fairness and Simplification: The Need for a Coherent Policy Perspective on the Many and Varied Dollar Limitations Contained in the Internal Revenue Code
• Ann Murphy, Campaign Signs and the Collection Plate–Never the Twain Shall Meet?
• Eric Lustig, Who We Are: An Empirical Study of the Tax Professoriate
If first issue is any indication, the Pittsburgh Tax Review is well on its way to accomplishing its mission:
The Mission of the Pittsburgh Tax Review is to provide a forum for the discussion and debate of current issues in the field of tax law. The Tax Review seeks top-rate scholarship from professors, practitioners, judges and other interested persons whose work contributes to the development, understanding and critical analysis of tax law. The Tax Review publishes notes, comments, reviews, essays, and articles concerned with Federal Income Tax, Federal Estate and Gift Tax, Corporate and Partnership Tax, International Tax, and related areas. By providing a forum in which these issues are presented, the Tax Review seeks to develop a greater understanding and appreciation of tax law.
The Pittsburgh Tax Review thus joins the Tax Law Review, Florida Tax Review, Virginia Tax Review, Tax Lawyer, and Houston Business & Tax Review as law review outlets for Tax Prof scholarship. (Editor’s shameless plug: we are delighted that the Pittsburgh Tax Review has agreed to join these other tax law reviews in providing abstracts of forthcoming articles to be published in the Social Science Research Network’s Tax Law & Policy e-journal.)
Professor Jones also published an important new casebook, The Tax Law of Charities and Other Exempt Organizations (West, 2003), with Steven Willis (Florida), David Brennen (Mercer) & Beverly Moran (Vanderbilt). The book is one of only three in this very important and growing area, and their novel multi-media approach is sure to attract professors and students. Here is a description of the book:
This law school text on charities and other exempt organizations uses a modular approach that allows instructors to tailor the presentation to their own style. Each chapter incorporates concise summaries of relevant law, cases, legislative materials, administrative rulings, questions, and planning activities. Part I explores the exempt purpose requirement, the exclusivity and commerciality doctrines and the procedural/organizational requirements for charities. Subjects include restrictions on charitable organizations, private foundations, non-charitable organizations, unrelated business income, modifications to
UBTI, controlled subsidiaries, unrelated debt financed income, and the taxation of member dues. It also reviews the charitable contribution deduction, foreign charities, and cross-border giving.
Each Saturday, TaxProf Blog shines the spotlight on one of the 700+ tax professors in America’s law schools. We hope to help bring the many individual stories of scholarly achievements, teaching innovations, public service, and career moves within the tax professorate to the attention of the broader tax community. Please email me suggestions for future Tax Prof Profiles. For prior Tax Prof Profiles, see here.
Saturday, May 29, 2004
The IRS participated with FBI and INS agents in a raid of a Philadelphia mosque. For more details, see here
Saturday, May 29, 2004
Germany will end the tax-free treatment of life insurance next year, according to press reports.
Friday, May 28, 2004
Today marks the 1-year anniversary of the signing of the Jobs and Growth Tax Relief Act of 2003. In a press release, Treasury Secretary Snow crows that the bill “unleashed the enormous potential of our free-market economy and the results are a great victory for hardworking Americans.”
The traditional 1-year anniversary gift is paper — so perhaps 600 billion pieces of paper would be appropriate to represent the increase in the accumulated federal debt since the passage of the 2003 Act (from other parts of Secretary Snow’s Treasury Department web site):
• $6.6 trillion in May 2003
• $7.2 trillion in May 2004
Friday, May 28, 2004
Americans United for Separation of Church and State has urged the IRS to investigate a Colorado Bishop’s Pastoral Letter stating that “any Catholics who vote for candidates who stand for abortion, illicit stem cell research or euthanasia suffer the same fateful consequences [as the candidates who support these issues].” According to the Bishop, such people “place themselves outside full communion with the Church and so jeopardize their salvation.” The group alleges that the Bishop’s letter is designed to endorse President Bush and other Republican candidates and thus crossed crossed the line into unlawful partisan politicking, jeopardizing the diocese’s tax exemption. For prior TaxProf Blog coverage, see here and here.
Friday, May 27, 2004
James Poterba (MIT) has posted Taxation and Corporate Payout Policy (NBER Working Paper No. 10321) on the National Bureau of Economic Research web site. Here is the abstract:
This paper presents new evidence on how corporate payout policy responds to the differential between the tax burden on dividend income and that on accruing capital gains. It describes the construction of weighted average marginal tax rate series for the period since 1929, and it suggests that the enactment of the Job Growth of Taxpayer Relief Reconciliation Act of 2003 should raise the after-tax value of dividends relative to capital gains by more than five percentage points. The impact of this change on payout depends on the elasticity of dividend payments with respect to the after-tax value of dividend income relative to capital gains. Time series estimates suggest an elasticity of more than three, and imply that the recent tax reform could ultimately increase dividends by almost twenty percent.
A non-technical summary is available in the June 2004 NBER Digest
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