MauledAgain

While I was posting the series on Student Focus, news reports continued to bring information concerning taxation, the economy, political activities, and life generally. Most of the news consisted of continuations of, or updates to, stories that already were underway. Most of the news involved topics on which I’ve previously commented. Nonetheless, a few observations are in order.

First, there’s the question of whether the economy is climbing out of the recession. Just as the various economic reports give conflicting signals, so, too, a trip across the country reveals inconsistent clues. Several decades ago, during the first recession that I experienced as a full-time member of the work force, I noticed that tractor-trailer traffic had declined significantly. That’s been the pattern ever since. So, if truck traffic is some indicator of economic activity, I’d conclude that the recession is ending. Why? Because there were as many tractor-trailers on the highways as there have been during previous cross-country journeys that occurred during periods of economic robustness. Those trucks are moving goods, goods that have been produced and presumably sold. If goods are being produced and sold in numbers that require at least as many trucks to transport them, then America’s economy is operating at pre-recession levels. Perhaps this activity has not yet shown up in the published reports. Another indicator is the number of trains that I observe, and, again, there did not appear to be any diminution. The number of trains and the number of cars in each train were no less than in years past. Those trains also are hauling goods. As with the trucks, sometimes one knows what’s being carried, and often one doesn’t. From the trains, it appears that a lot of coal and ethanol is being moved. From the trucks, it appears that a lot of cattle, Wal-Mart products, beer, and heavy equipment is being shipped. The two types of trucks that appeared to be diminished in numbers were automobile carriers and moving vans. That’s consistent with what we know about this recession. There are many reasons it is good to get out of the office and travel about, and though this is not the primary or even secondary one, it is helpful to take a first-hand look at the transportation sector.

Second, Pennsylvania still does not have a budget. Last month, in A Tax-and-Spend Conundrum, I explored the challenges of creating a state budget that provides all the things the citizens want without increasing taxes. Apparently, the conundrum is real, because in the six weeks since I wrote that piece, the legislators in Harrisburg haven’t made much progress, in any, in dealing with the state’s financial mess.

Third, according to a report in Friday’s Philadelphia Inquirer, during the next 26 years, there will be a $45 billion shortfall in the amount of funds available to maintain the highway infrastructure in the Philadelphia area. Of the $110 billion that will be required, only $65 billion is lined up. If most Philadelphia-area residents had the chance to travel throughout the country by vehicle, they’d discover highway projects all over the place. Not surprisingly, the increase from last year is attributable to economic stimulus money, as signs posted near most of the construction projects boldly proclaimed. If other states can get their acts together, why can’t Pennsylvania and New Jersey? As for New Jersey, perhaps this article in Friday’s Philadelphia Inquirer suggests some answers.

Fourth, more celebrities have run into tax trouble. Add tax Stephen Baldwin, Foxy Brown, and Toni Braxton to the list. Do celebrities not budget for tax advice? Or are they paying for what turns out to be incompetent tax guidance?

Fifth, but certainly not last or least, the proposed health care reform bill would impose an income tax surcharge on married couples with adjusted gross incomes exceeding $350,000 and unmarried individuals with adjusted gross incomes exceeding $280,000. I will have more to say about this in the weeks to come. This idea is not unlike one that I have advocated, most recently in Tax Change Ought Not Be Tax Redux. The current legislative language isn’t quite what I suggested, for I had asked, “Why not a progressive rate structure that increases the rate by 1 or 2 percentage points for every $1 million or $2 million increase in taxable income?” and had not slotted the revenue specifically for health care.

Sixth, and finally for the moment, news in the world of legal education continued to be generated. The debate about the use of lap-tops in the classroom showed no signs of ending, and the efforts by some to do away with the use of Powerpoint slides have been re-invigorated. There was no let-up in complaints about law school and about the shortcomings of law school faculty. These, and other legal education issues, also will get my attention as the summer progresses and autumn arrives.

In the meantime, thanks to Paul Caron and his TaxProf Blog for functioning as my tax news ticker while I was out of my office during the law school’s move into a new building and out traveling. Congratulations, Paul, on reaching 7,500,000 visitors. By my calculation, I will be 150 years old by the time MauledAgain reaches that milestone.

I wrap up the student focus section of the course by telling students that at times they indeed will find themselves overwhelmed, frustrated, challenged, and defensive. They will discover that they must make adjustments to how they study, how they learn, how they read, how they assimilate material, how they prepare for semester exercises and the examination, and how they relate to their academic endeavors. Though it’s something I would rather have the chance to share with first-year students, it nonetheless is no less valuable for the upper-year law students who come into my courses, tax or any other subject.

I tell them this: "You are taking graduate level courses, in a doctoral program, enrolled in a professional school, and this means that you must make an effort unlike any you’ve put forth in previous academic experiences." The translation, "You’re not in college any more," is something I save for informal conversation when the need arises. Several of my colleagues, having come upon my reference to the trinity of graduate level courses, doctoral programs, and professional school have asked permission, kind folks that they are, to use this in their courses. Without hesitation I agreed, and if anyone reading this who teaches law school or in any other graduate-level professional school offering a doctoral degree wishes to use it, please, do so, and there’s no need to ask permission.

And so this portion of the course ends. Hopefully it has been helpful to those who teach the basic tax course, who teach other tax courses, and even other law courses. Take from it what you will, adapt it, condense it, work it into the classroom experience, or simply suggest students read this series of a dozen posts. For law students who want the advice of someone who thinks this “student focus” is the foundation of doing well in one’s legal studies, hopefully it will be no less helpful to you. At the very least, it may answer those questions of "why?" that so often are uttered by law students not understanding why their professors are doing what they are doing. Perhaps it will do more than that, and show the way to some modification of learning techniques that will improve performance, raise grades, and harmonize the relationship of the student’s intellectual efforts with the student’s educational goals.

It has been my experience that learning a complex subject matter is made easier by breaking the material down into what I call "digestible bits" and after learning how they work, examining the relationship of each bit to each other bit, reconnecting them in what is an attempt to reconstruct the evolution of the material. In other words, rather than looking at the enormity of the segment of federal tax law that is studied in the course and throwing up one’s hands in futility, students are advised by me to "divide and conquer" the pieces of the tax law that we are studying. Some students understand this approach, perhaps intuitively and surely from experience, but for others, especially those whose education has taken a holistic bent or who prefer to avoid focusing on details, the adjustment is challenging.

To help students in this effort, I provide them with the Course Outline and Assignments document that I have already mentioned. In many respects, I have done the breaking down process for the students. Though some students can learn valuable lessons from organizing the disjointed product of a rambling professor and a class of unfocused students, too many students either go off on the wrong track or give up on a course when there’s no adequate roadmap. Students are advised to present road maps when they take their first steps in appellate advocacy, so it isn’t that alien a notion to do the same thing when putting together a course.

The breakdown approach is useful not only at the course level, but also at the level of the statutory and regulatory material that constitutes a significant portion of the course. I take the students through an analysis of how Code sections and Treasury regulation sections are constructed, showing them that the secret to parsing the language is, again, to break the conglomeration of words into phrases and other segments and then to re-connect them, preferably in a manner that resembles English more than what I call "tax-ese." It is during this explanation that students are given the opportunity to understand the significance of flush language, definition clauses such as "For purposes of this paragraph and paragraph (7) but not paragraph (4),...." Later, when we get to substantive material, they will encounter the word "over" in its subtraction sense and they will be encouraged to discard their instinctive treatment of the word in its division sense. Similarly, the language of ratios and fractions is left for later in the semester. But the same principle will apply, namely, break the sentence down into its parts.

To help students with this level of breaking down material, I provide them with several charts that show the names of the various components of Code and regulations sections. They are annoyed, and disturbed, at the inconsistency between the two types of codifications. It is amusing to see their reaction when, in response to the inevitable question, I tell them that I have never figured out why the regulations don’t track the Code terminology.

Finally, I try to instill in the students’ minds the difference between what they think they are going to be doing and what they often will need to do. They are accustomed to working from premises (or facts) to conclusions. Though there is opportunity enough in tax, and in other courses, to engage in this consequential analysis, there also is a need to understand the process of working from a desired conclusion to the premises or facts. As an example of how students enhance my teaching, I did not articulate this aspect of the course in this manner until a student, who had come to my office several times to complain that something was wrong with my teaching and grading because she was a top student but was doing poorly in my tax course, returned to exclaim, "I figured out what you are doing. We spent a year being given A and B, with the objective of getting to C, and you’re telling us we have A and want to get to C and are asking us what we need to get there." Bingo. That’s the essence of transactional work, of tax planning and of planning in many other areas of law. Yes, her tax grade matched her other academic accomplishments and she embarked on an outstanding career in law, though not in taxation. My discussions with her, and her culminating discernment of what I was trying to get students to understand, made it much easier from that time forward to get the point across to all the students, in the classroom, before the semester had progressed very far.

Next: hammering home the conclusion

Knowing that by this point student anxiety is growing despite my attempts to explain what will be transpiring in the course, what is expected and why, and how, in the long run, this approach will serve them well in law practice, I share with the students some "helpful hints" for dealing with the course.

First, I tell them not to be intimidated or disappointed by overviews. Some of them, I note, will want much more than what they will be getting because they are or will be caught up with tax law as something that grabs their attention. Others, unfortunately, jump to a conclusion that the material is too difficult before giving themselves a chance. Put that aside, I tell them, and work through the course with me. I have no goal but to get them educated about tax law.

Second, I warn them to ignore what others say. Rumors abound. Students who took the course and were unhappy with their grade sometimes will make assertions inconsistent with their own lack of effort, with the effect of causing others to think that no one can do well in the course. That’s nonsense, a conclusion readily apparent to those who bother to look at the grade distributions for previous semesters. Others take delight in stirring up anxiety, and they should be ignored rather than treated as oracles from on high. If they have a question, I invite them to ask me. After all, I ask, who knows more about this course than the person teaching it?

Third, I explain that tax law has its own language and culture. Rather than being frustrated by the use of new terminology or the assignment of new meanings to familiar words, consider the course similar to a language course. Understanding a language is easier if one understands the culture in which it arises, and this is true of tax law. Learning a language is easier if one immerses one’s self in the culture, and this is why it is important for students to dig into the material from the outset. It is difficult to learn a language the night before the final exam, and it is difficult to learn tax law during the two-day "reading period" before exams. Interestingly, this analogy sinks in with most students.

Fourth, I advise them that merely learning rules is inadequate to deal with the constant change in tax law, and the same is true for any area of law. Knowing the rules of grammar and pronunciation for a foreign language does not make a person capable of communicating well enough in that language to get by when traveling, let alone make the person fluent. The key is to understand the process of tax law, the sequence of analysis, the reasons for a rule, the manner in which rules are applied, and the relationships among rules.

Fifth, I suggest that they consider each situation from one or both of two perspectives. Is it a compliance question, that is, are they doing problem solving for the client? Or is it a planning question, that is, are they trying to prevent problems for the client in the future? Understanding this distinction matters, because there is far more control over events when planning than when looking at the consequences of what already has happened. I use this hint to reinforce the problem approach of the course. Lawyers solve problems and prevent problems, that is, if they are doing their jobs well.

Sixth, I assure them that issue recognition is not the difficult part of the analysis the way it was during their first-year courses. I also assure them that case analysis is not the key to the course, and when there are cases to analyze, that is the one thing with which they are most familiar, and considered by me to be adept, because they’ve been doing it longer than they’ve been doing any other legal skill.

Next: breaking down the course and the analysis

When I describe to the students how the other 1/3 of the final course grade is determined, it is only the existence of a well-oiled student rumor mill that eliminates the groans that filled the room in the early years of semester exercises. Semester exercises consist of short tasks and bundles of multiple-choice questions, usually four in a group. There are ten such exercises during the semester. Usually five are administered in class, these being the multiple choice questions and the student response pads ("clickers") being used for the recording of student answers. The other five are administered outside of class. They are posted to the Blackboard classroom and students have four or five days (depending on whether a weekend intervenes) in which to submit a response. The model answers usually consist of four short paragraphs. The questions usually ask students to identify facts that are needed in order to respond to a partner’s or client’s inquiry, to point out errors in what some other professional has asserted, to identify mistakes in actual web pages, to list arguments that are irrelevant to the issue, and so on. I warn students that although it would take about five minutes to type the model answer if I were dictating it to them, they will find themselves claiming that it took hours to do the exercise. I explain that those hours are dedicated chiefly to doing the post-class assimilation that they have n ot yet done and that is triggered by the posting of the exercise. I wait until at least a week after a topic has been covered in class before posting an exercise that deals with the topic, so there is ample time for students to assimilate. I tell the story of one student, who came to me one semester shortly before the exam and explained he had assimilated thoroughly the topics addressed by the exercises, but when asked by me about the rest of the course he laughed and said he had not yet reviewed those topics. One goal of the semester exercises is to discourage the bad habit of waiting until the end of the semester and using a “reading period” to do the semester’s work.

Experience taught me that unless some mechanism were put in place to deal with students who happen not to be in class on the day an in-class exercise is administered, either I or an administrator will be charged with the task of evaluating the worthiness of the absence excuse. Having tried that sort of process, and having been told by a former associate dean that it was a nightmare for him, I chose instead to permit students to drop two of the ten scores. In other words, it permits two absences. The odds of a student missing three or more in-class exercises is rather low unless there is some supervening problem such as an extended illness, in which case other arrangements are made for all of the student’s courses by the school administration in cooperation with the faculty teaching the student’s courses. What happens, I tell the students, is that too many students waste their drops on out-of-class exercises, especially early in the semester, because they don’t bother to check the Blackboard classroom. Even with the option of signing up so that an email is sent automatically whenever something is posted, there still are students who manage to waste drops in this manner and then become hyper-anxious when they discover that an interview caused them to miss an in-class exercise. So I devote a few minutes to emphasizing the need to stay on top of things, just as they would need to do in law practice.

I also explain that the purpose of the semester exercises is to give them a chance for feedback so that they can identify and rectify errors in their thinking processes before the exam gives them a chance to replicate those errors throughout all of their answers. They are informed that the exercises focus on specific "bad academic habits" that need to be unlearned. Of course, they like to think they don’t have any bad academic habits but I explain to them that one of my tasks is to help them eliminate those habits rather than simply lower their grade on account of their effects.

Finally, I point out that the feedback from these exercises has a higher quality because they are being grades and thus are "for real." Unlike other study devices that provide feedback, such as CALI exercises and practice questions in student study guides, the psychological impact of knowing that there is no “do over” puts the students in a situation that more closely resembles both the exam and law practice. That is one major goal of the course, getting students acclimated to functioning in environments similar to those in law practice.

Next: hints for students

Every law student lives in anticipation or fear of the exam. Hopefully, as their studies progress, the fear disappears and the anticipation increases. I doubt, though, that students will even look forward to exams the way people look forward to vacations.

Knowing this, I tell them about the exam. It’s too early to predict precisely how many questions will exist, or the precise nature and mix of the questions, but it’s not too early to share information that will help them in their preparation for class, their note-taking and other class activity, and their post-class assimilation.

They need to know, and I tell them, that the exam is open-book. For some students, this is their first law school open-book examination. It means they need to make an adjustment, ditching the "memorization and regurgitation" approach in favor of one that emphasizes process of thinking. Particularly in tax, it makes no sense to memorize rules that frequently change. Some students are relieved to hear this. Others, thinking that they had mastered the closed-book exam, become anxious about their ability to handle an open-book exam. A few apparently don’t react, because 8 or 10 weeks into the semester I almost always get an email asking if the exam is open-book or closed-book. Hello. Oh, this information also exists in a "course information document" which is on the Blackboard classroom. What a way to let a professor know that someone hasn’t bothered to read something that a professor took time to prepare.

They also need to know that the exam score accounts for 2/3 of the final course grade. Though I don’t get into the mathematical formula, I tell them enough so that they realize that it will take more than doing well on the exam to do well in the course. This is yet another aspect of my efforts to eliminate the end-of-semester cram time approach.

Next: the other 1/3 of the final course grade

Lest students think that I plan to toss them out into a post-class environment bereft of help, I list for them the tools that exist to help them in their assimilation tasks. First, I give them a very detailed Course Outline and Assignments document. It usually runs for about 10 pages. Yes, it resembles a Harvard outline, but at the highest levels, that sort of organization makes sense. What they have is an arrangement of the course into which they can fit their preparation, class notes, and assimilation. As an aside, one of the better laughs I get every now and then is the course evaluation that claims that there was no syllabus. Ought not that student’s evaluation be tossed aside as de facto disconnected?

Second, there is a Blackboard classroom for the course. It not only provides students with materials, the course outline and assignments document, and the slides, it also contains forums in which substantive issues can be discussed. Ask questions. Answer questions if you see one posted and it hasn’t been answered. Interestingly, students rarely post answers. I’m convinced it’s a cultural thing but I haven’t explored the issue in any deep, methodical, or empirical manner.

Third, there is email. I explain why I like email. It’s two in the morning, and a student who is studying has a question. In days before email, if they wanted to ask me, they needed to wait until the next day at the earliest. Often, they didn’t remember the question, or could not articulate it well. With email, they can compose a message while their brain cells are working with the material. They won’t get an instant response, but their question will be much more coherent than when it is formulated hours or days after it crossed their mind. But they do get a response. If the question is a good one, and almost all are, and relevant to the class, I post the question and my response to the Blackboard classroom after deleting references to the student’s identity. This is efficient, I explain, because it spares other students from composing the same question or trekking to my office to ask a question that has been answered. It cuts way down on the “lines outside the professor’s door” syndrome that is highly inefficient. There is another forum, incidentally, that is used for administrative and course “housekeeping” and though this isn’t directly related to the assimilation process it contributes to the culture of digital communication. No, I do not use twitter in the course. At least, not yet. Perhaps never. We’ll see.

Fourth, there are computer-assisted legal instruction exercises in taxation available at the CALI web site. These happen to have been written by yours truly, though a search for someone to assume the updating has been underway for awhile, as I put in a plug (contact the folks at CALI). Anyhow, this permits students to practice. It gives them feedback on the extent to which they have mastered a topic. It shows them variations on how facts need to be gathered, examined, and set against rules and concepts. It boost self-confidence where appropriate and gives warnings where needed. I stress that they cannot do all of the exercises the night or even the entire day before the exam. They need to work through these on a regular basis. It gives them the opportunity to engage the material, something that must take place during assimilation.

Next: describing the examination

The next major point that I make during this emphasis on student focus is that it doesn’t end when class is over. Instead, they need to engage in what I call post-class assimilation. I stress to my students that this is more than waiting until the end of the semester to go over class notes and is more than the proverbial law school outlining. It is an essential process that needs to take place on a regular basis.

As is the case with pre-class preparation, I tell students that they should expect to invest one to two hours of time outside of the classroom, after class, for each 50-minute classroom session. Again, the logical question is why such a wide variance? Again, it depends, for one, on the particular topic and how much was covered in class. It depends, as well, on the student’s ability to pay attention in class, the student’s skill at taking notes in a methodical and efficient manner, and on the extent to which the student was prepared for class. Under ideal circumstances, a well-prepared student has far less to do after class than does the student who skimmed material or didn’t bother to look at it to any extent.

Knowing that students are likely to respond by asking what they are expected to do, I share with them what I consider to be the keys to assimilating the material. What they need to do, I emphasize, is to prepare their own summaries, charts, graphs, outlines, or other representations of the concepts, the rules, the application of the rules to facts in hypotheticals or problems, and the sequence in which analysis needs to proceed. I surprise some of them when I dismiss the so-called Harvard outline, the one with the roman numerals, upper-case western alphabet characters, Arabic numerals, and so on, as ineffective in many instances. There are times when a flowchart is worth thousands of outline words. I promise them that I will give them flowchats and other visual representations early in the semester so that they can see what they should be aiming to create, and I also tell them that as the semester progresses there will be fewer instances of my giving them these sorts of summaries. That distresses them. But, I explain, this is necessary in order for them to learn.

The best results occur, I point out, when they do their own work. Do not use others’ outlines because none of them are flawless, and in tax courses, there are changes that make old outlines obsolete. I warn students that I, and others who teach tax, find delight in focusing exam questions on topics that have changed, and when students inquire about their grades there are times when an exam will demonstrate, indirectly, that a student used an old outline rather than invest in creating his or her own post-class assimilative materials. It’s a tough way to learn a lesson, so they are getting that lesson on the first day of class, with no cost in terms of their grade. Some get it, but unfortunately too many do not. To dispel any notions that reading someone else’s work is the pathway to success, I tell them that they will not get in shape watching me ride a bicycle. That turns on the light bulbs for another handful. This sounds harsh, but its truth is inescapable. It is so obvious that students miss it until it is pointed out to them.

Then I share one more secret. It is worthwhile, I advise students, to teach one another. It does not matter whether it takes place in tutoring, in study groups, in participation on the Blackboard classroom for the course, or in some other way, but the best way to learn something is to teach it. They stare at me. I respond by noting that as the teacher I don’t get to pass, come to class unprepared or without my books, or stare blankly when asked a question. Oh, I could do that but I wouldn’t last very long, or ought not to. When they enter practice, they will be teaching clients, partners, judges, and other attorneys. What better way than to get started now, in a non-adversarial context. Anticipating another reaction, I suggest that for those who are competitive about grades, helping another student will do as much if not more for the helper than for the helped. I also note that they are not competing for a fixed number of A or A- grades, so that they ought not sign onto the “every person for himself or herself” attitude that flourishes here and there, now and then, in assorted law schools.

Next: helping students assimilate

One of the things that I must emphasize to students when explaining what they should be doing during class time is the need to avoid the transcription game. Too many students enter my courses continuing to think that the key to learning is to write down everything that is said, as close to word-for-word as is possible. In doing so, they divert their cerebral resources from what they should be doing.

Years ago, a student showed me a transcription of one of my advanced tax courses. It had every false start sentence, every umm and err, every student comment, in short, everything. The student explained that she had been a legal secretary and was good at this. Indeed, she was. Some years thereafter, a student gave me a copy of his class notes. They filled a binder. They were not quite a transcription but they were close. What does a student do with the transcription? Memorize it? No, not in my courses, because they are open book. Index it? No, not in this day and age of the word processing document and the find function. I think some students want to use it as a resource from which they can extract segments to submit as answers to questions. The flaw is that many questions cannot be answered with text from a transcription.

I explain to students that notes are just that, notes. After five minutes of discussion, there may be one or two phrases or sentences worth memorializing. Consider what happens if a student asks a question and I choose to reply. Some students don’t need my reply, but some of them insist on writing it down. If the student who asked the question still doesn’t get it, I try another approach. Some students will transcribe that. Why? If they already get it, the continued dialogue with the student who asked the question doesn’t make another point. It’s repetition. My favorite example, though, is to share with my class what has happened in the past, at least until I started sharing this story. I was reading a sentence from the Internal Revenue Code, stressing certain phrases and rattling through the less relevant language. I expected students to be following along in their copies of the statute. I was surprised when a student asked me to repeat what I had said because he was having trouble writing down all the words. I told him he already had all the words. And, yes, this was an instance where even a student who had not read the assigned statute before class should have realized I was reading from the Code, because I had explained before I started to do so that I was doing so. For the same reason, I provide the Powerpoint slides before class, so that students can enhance the main points rather than sit and write everything they see on the screen. Yet I see students trying to write what’s on the screen, while surely missing the points that are being made as the class explores each part of the problem solution or flowchart.

The goal, I elaborate, is understanding and comprehension. Note taking should reflect that goal rather than the goal of collecting words, phrases, sentences, and paragraphs. It matters less that a student can repeat the words I used to explain something than to have the ability to explain it using his or her own words.

Coupled with this problem is the long-standing complaint by students that I talk too fast. Too fast means too fast for transcription. By moving at thinking speed rather than writing speed I discourage transcription. A former colleague, later a dean at another school and a legal educator for whom I have much respect, listened to me some years ago gripe about students who want me to speak in plodding rhythms so they can transcribe every word. He shared with me something he had picked up somewhere along the line. It takes more time to write than to read, more time to read than to speak, more time to speak than to listen, and more time to listen than to think. In other words, thoughts move through the students’ minds more quickly than they can write them or speak them. The same is true of my mind. That is why many of us tend to speak quickly lest the five things we want to share begin to disappear before they are expressed. Trying to write every word representing those five things rather than using a catch phrase of some sort bogs down the process. If a student is fully prepared for class, much of what is being said or worked through already is in, or should be in, the student’s brain and preparatory notes. Ideally, by the second year of law school, a student should be using the classroom experience to modify and enhance notes taken during pre-class preparation rather than to create whole-cloth a new set of materials that then need to be integrated with the pre-class notes. Transcription increases the workload in much the same manner as happens when students buy every student guide ever published for a particular course and then try to put it all together. I tell them that they would need years of full-time endeavor just to do that for one of their four or five courses. That’s not what they should be trying to do. And I do my best to discourage it.

Next: post-class assimilation

Having instructed the students as to what I expect them to be doing before they arrive in class, I then turn to what they are expected to do in class. I begin by describing what will occur during class and the opportunities that will be presented to them to sharpen and revise what they have absorbed during their pre-class preparation and to determine the extent to which they have grasped the material.

The primary focus of class time, aside from the introductory classes, is to examine problems similar to those that clients would bring to the lawyer, and to consider questions similar to those clients would pose to the lawyer or those that a partner might ask of an associate. In other words, the goal is to put the students in situations that resemble law practice as nearly as possible. A perfect simulation isn’t possible, but it is important for students to know that class is the equivalent of a laboratory.

Knowing that many of the students are in their third semester of law school, having finished a year during which almost all of their class time has been devoted to case analysis, I explain to them the different role case analysis has in the course. I do this because in my early years of teaching the course, students complained that I did not “take us through the cases as our first-year professors did.” I explain to the students that they are now experts in reading, briefing, and analyzing cases. We don’t have time to go through the litany of questions dealing with the identification of the parties, the procedural posture of the case, the applicable law, and the other ingredients of a classic first-year case brief. Instead, as we work through a problem or deal with a question, students should be prepared to bring forth one or more cases that they have read and digested in support of an argument or to rebut an assertion that has been made. The cases, in other words, are tools, as are the statutory and regulatory provisions, rather than the central characters in the educational process.

It then is time to turn to the thorniest piece of the in-class experience. I tell the students that there will be some introductory lectures for most of the topics. I also tell the students that I have struggled for many years with this aspect of the course. The advantage of the introductory lecture of 5, 10, or 15 minutes is to give each student a chance either to affirm what he or she picked up from pre-class preparation or to raise a hand and request clarification on something that did not make sense. At this point in my teaching career, I have a pretty good idea of which bits of black-letter principles are likely to cause consternation and which are sufficiently obvious to merit little or no attention until we turn to the problems. The disadvantage of the introductory lecture is that some students interpret it as an invitation to set aside pre-class preparation and to treat the introductory lecture as information acquisition. I warn students not to do this, because if they are encountering what they are hearing for the first time at the beginning of the class, they will not have time to process it in the 30 seconds that might exist between the end of the introductory lecture and the commencement of the examination of the first assigned problem for the topic. So why do I retain the introductory lecture? The alternative, which is to dive into the first assigned problem, is frustrating and ineffective. Repeated questions from unprepared students cause the flow of the class to become distracted and jumbled, which few students appreciate, and if those questions are ignored, students become angry because they feel ignored and short-changed for their tuition dollars. Until there is an institutional culture similar to that found in other graduate programs, where faculty and students come into the classroom with much more equivalency, the jumping right in approach is counterproductive in a course with so much to do and so little time in which to do it. Understanding that much of the inability to emulate other graduate programs is the lack of the LL.B. and LL.M. education that should precede doctoral work, I made the choice to take the approach that caters to the students’ preference for introductory lectures.

Finally, I tell the students that we will be using student response pads, or "clickers" very often during most of the course. Sometimes their answers are graded, and more on that later. Most of the time the answers tell them and tell me whether or not they’re getting it. Sometimes I pose the clicker question as soon as we reach a problem. Some questions, I inform the students, are simply for my edification and cannot be answered incorrectly. For example, at the appropriate point I ask them if they have dealt with time value of money. The answers vary from year to year. The bulk of the questions, though, require them to select answers, pick the best argument, identify facts that are needed or, alternatively, irrelevant to solving the problem, or identify applicable authority. The benefit of instant feedback appeals to the students. As one would expect, they’d rather find out during the semester than on the exam that they don’t grasp a concept or, worse, that they have a "bad habit" in their analytical reasoning skills that taints most of their answers.

Next: discouraging the transcription game

Students who are preparing for a law school class, particularly those in certain areas of the law, will become frustrated rather easily when they compare the amount of time they are investing with what they appear to be getting out of that investment before they go into the class. This frustration is one of the leading causes of students deciding to ignore the assignments and hope that they can pick up what they need to know simply by going to class or, worse, getting their hands on an old outline.

I urge students to try to identify what isn’t coming together for them as they prepare for class. Though sometimes it is the complexity of the material, it is not unusual to discover that the stumbling block is the student’s lack of familiarity with the transaction in question. Far more likely to be a problem in tax, contracts, or property than in torts or criminal law, the shortcoming arises from the student’s presence in a doctoral program in a field in which the student does not have a bachelor’s or master’s degree. Only law has this bizarre and absurd arrangement. Graduate students in history have been through a good dose of history classes, and the same can be said of graduate students in chemistry, engineering, and a variety of other disciplines. Even medical students are required to take certain courses so that time isn’t wasted in medical school catching up on basic concepts. The J.D. as a "fake doctorate" as I pointed out in Dr. Maule, I Presume?.

To get this point across, I share with the students the struggles of their predecessors who, when dealing with a problem assigned for the life insurance topic, simply gave up because they did not understand what life insurance is and how it works. Their reaction was intensified by the second half of that particular day’s assignment, the taxation of annuities. For every student who was afflicted with ignorance about life insurance, there are three who have no clue about annuities. So, I tell them, this class is burdensome because they are learning not only tax but also the underlying transactions. The fewer that they understand, the more challenging and frustrating is the course. I know this, they need to know this, and many of them are shocked. But, I assure them, if they are aware that this is what is happening, they are in a better position to keep it from spiraling out of control.

Next: in-class learning methods

I begin the student focus by addressing pre-class preparation. I tell the students that their assignments for each topic are in the Course Outline and Assignments document, that the assignments are set forth in a specific sequence, and that they should go through the assignments in that sequence. They are in that sequence for a reason, and if a student tries to go through them in some other arrangement, the student is doing nothing but creating additional challenges that are needless and worthless.

There is one exception to the "read in order" advice. I tell the students that before proceeding to any assigned problems they should go back and re-read the assigned Internal Revenue Code provision, and as they do the problem to go back to any of the other materials. I do this so that they become more familiar with statutory, and where applicable, regulatory language, and because the process of repetition solidifies their grasp of the material. This is one instance in which my “student focus” would need to be modified for courses that do not, for whatever reason, deal with statutory or regulatory material.

Then I turn to what may be the most important part of this segment. I tell them that the learning process requires then to try doing the problem, even if they get stuck part way through the process, or even if they end up with a result that does not make sense. I stress to them that effort matters more than outcome. I explain that the process of trying immerses them in the material. I also explain that even if they fall down trying to apply the law to the facts, they need to absorb the facts. There is nothing more embarrassing, I tell them, than asking a partner "who is X?" when the partner already answered that question in the memo or email that the partner previously sent to the associate. Thus, I tell them, consider the problem to be a memo or email from a partner. Even if they cannot figure out if the exception to the exception applies, they need to know the names of the parties, the transactions in which they engaged, the number of items, the total dollars transferred, the year or years if given, and so on. I warn them that when they ask in class, "Where did you get that from?" and the answer is in the problem, they should consider what the repercussions would be if they asked the question of a partner at the law firm. I also tell them that I am not impressed when, while we are working on part (a) of a problem, someone raises his or her hand and asks, "What if such-and-so were instead this-and-that?" when part (d) of the problem asks that precise question. There are no points for creativity when the question suggests that the student does not know what part (d) asks, because it implies that the student did not read and prepare the problem.

I further explain that there is a huge difference between no effort and a failed effort. The student who tries to solve the problem but fails has learned something, for one can learn by failing, especially in a controlled environment such as a classroom. On the other hand, the student who makes no effort learns nothing. Even if that student subsequently acquires the answer to the problem, it will not make as much sense as it does to the students who are so much more familiar with the analysis because they immersed themselves in the thinking process.

There is value in this preparation. And, yes, it will take time. They should expect to invest one to two hours of time outside of the classroom, before class, for each 50-minute classroom session. Why such a wide variance? It depends, for one, on the particular topic and the length of the assigned material. It depends, as well, on the student’s reading speed, comprehension ability, familiarity with the underlying transaction, and grasp of topics previously covered. Some classes will demand 3 hours of preparation but others only 30 minutes. The first class, I point out to them, the one in which they are sitting, probably required a grand total of 5 minutes of preparation. Yes, I’m practical, and realize I’m carrying the load for that first class.

Next: how the inherent flaw in the law school learning process makes preparation more difficult

Two summers ago, in Structuring the Basic Tax Course, Part I, I commenced a series of 40 posts that explored “how and why I have structured the basic tax course that I teach in the way that I do.” My inspiration for the series was a set of conversations that I had with two colleagues, one who would be teaching the course for the first time at Villanova, and the other, for the first time, period. We discussed what topics to cover in detail, what topics to skim, what topics to omit, the mix of problems, case analysis, lecture, and other approaches, and the sequence in which the topics should be presented. They didn’t end up imitating my course, and that wasn’t my intention. They did benefit, and they have told me this, from my insights and I did influence some of what they do.

This summer, I begin another series, though it will not reach 40 posts. This time I am going to share the portion of my first-day overview in all of the courses I teach that I call "student focus." In short, it is my explanation to students of what I expect from them, and why I expect from them what I expect. It is not limited to tax courses, and I know that because I have taught courses other than tax courses. With some modification, it ought to be beneficial in any law course, or, for that matter, in any course in any discipline.
I break the student focus explanation into five parts. First, I talk about pre-class preparation. Second, I discuss what happens, or should happen, during class. Third, I talk about post-class assimilation. Fourth, I discuss how their efforts will be scored and graded. Fifth, I share some ideas about ways in which they can make their responsibilities easier to meet, and in an efficient manner. Each of these segments addresses several points, and I intend to work through these as this series of posts progresses.

Why have I concluded that a student focus explanation is worthwhile? Because early in my teaching career I discovered that my students weren’t doing what they should be doing, seemingly because they did not know what they should be doing, or if they did know, they did not understand why. Because my students have been in law school before they reach my course, it is reasonable to question why they don’t have these things already wired into their brains. I don’t know the answer. It could be that they’re not absorbing it when they first encounter it, or it could be that they’re not encountering it. My student focus explanation also has the salutary secondary effect of letting students know at the outset what is expected by me, and giving them the opportunity to drop the course and head in some other direction if my expectations are more than they are willing to try meeting.

What I am planning to write is not a transcription of what I say in class. I have no such transcription, and to the best of my knowledge, none exists. I deliberately do not read from a script, but simply work the students through the principal points I wish to address, embellishing them in the manner that appears to be working best for the particular group of students in the room at that moment. But although the precise words change from course to course and semester to semester, the gist of the presentation remains the same.

Next: pre-class preparation

Someone commenting on What Is Taxation? caused as thought to cross my mind. The anonymous commenter took the position that taxes are not like club dues nor are they payment for services.

So, if taxes are not equivalent to club dues or payment to services, the objection must rest in the allegedly involuntary nature of taxes. But taxes are not involuntary. A no-tax political party could repeal all taxes if it gained control through elections, but that won’t happen because too many people realize the danger of having no taxes and appreciate why taxation must exist. Nonetheless, if the tax-opposing minority wants an out so that they’re not at the mercy of the majority, perhaps there is a solution. This is when the thought entered my brain.

What if the world’s nations --- all of which share a universally held commitment to imposing taxes --- set aside an area of land and invited all those who disliked taxes to settle there. It would be agreed that no nation would invade Taxlessland, that every nation would sell good and services to, and purchase goods and services from, Taxlessland just as it does with other nations. The only restriction other than those generally applicable to all nations would be that the nation of Taxlessland would be prohibited from imposing taxes. It could have a government, but it would need to figure out how to make the government operate other than through the imposition of taxes, import and export fees, user fees, or any other sort of government exaction. There would be a sufficient number of settlers so that a simple barter economy would not suffice.

What would happen when a citizen of Taxlessland stole from another? What would happenn when a natural disaster hit? If currency was required, who would print it? Who would pay for the cost of printing it? Would a utopian community of generous neighbors emerge? Or would a strong-armed bully take over? Would vendettas replace a governmental justice system? Would the law be taken into the hands of whomever acted at his or her own whim? Would anarchy ensue?

I don’t know if the proposal would permit unhappy citizens of Taxlessland to return to their former abodes. Perhaps, if they were willing to embark on a mission to educate the tax objectors still living in their former countries. Those who teach from experience bring a certain genuineness to their efforts, and that surely would be the case in this instance.

Oh, there would be one more condition. Cameras would be placed throughout the territory and in the public spaces of Taxlessland, and transmitters would send the audiovisual information to satellites so that the rest of the world could see what happens. It would be the best reality tv show imaginable, would it not?

In my last post, I asked, "Come to think of it, what tax isn't disliked?" In Tax as a Hate Crime?, I noted, "There are people who hate taxes." Though some people, perhaps many people, can bring themselves to accept the need for paying taxes, the act of paying taxes probably is not in and of itself a source of pleasure or happiness. It doesn't generate the same sense of doing good as does, for example, making a charitable contribution.

In the string of posts that began with Pay Taxes, Be Happy, and ending, at least for the moment, with What's So Bad About Higher Taxes on Millionaires and Billionaires?, one of my themes was that the reason people in countries with relatively higher taxes are happier, according to various surveys, is because in the long run they get something that they otherwise would not be getting.

At a certain level, life would be great, would it not, if there were no taxes? Imagine having a salary of $75,000 and taking home all $75,000, or at least taking home everything except what was withheld to go into a retirement fund. But would life not even be better if there were no bills to pay? Imagine having a salary of $75,000 and not needing it because there was no mortgage to pay, no utility bills, no food bills, no bills for anything. Preposterous? Of course. So callled free-market enthusiasts would point out the absurdity of expecting something for nothing, and would explain that if no one paid for utilities, no one would provide them because there would be no economic profit in doing so. Cannot the same be said about paying taxes? Are not those who oppose taxes, and those who support low or no taxes on income other than wages, asking for something for nothing or for next-to-nothing? People object to increases in fuels taxes, even to keep up with inflation, but they gladly drive on highways that someone, somehow is providing.

The argument over taxes and happiness masks a deeper issue. It's not a matter of tax opponents advocating that all things should be free. They want people to pay for utilities, schools, roads, and food. But they want the money to go to so-called private industry rather than government. They don't want government providing anything because anything that government provides cuts into the profit-making opportunities of those with capital. Yes, some even advocate privatizing national defense, along with toll roads and charter schools. Ironically, these free-enterprise folks gladly stand in line, or pay lobbyists to stand in line, seeking tax dollars in the forms of direct subsidies, tax credits, or government contracts to fund their private enterprises.

What's their argument? The argument is that the private sector is more efficient at doing these things than is the government. The argument was successfully advanced almost thirty years ago, and with a few interruptions, we've had almost a generation of experimenting to see how well things go when the private sector runs the show. After some seemingly resounding success, masked by increases in debt far more so than by innovation and productivity, and costing much in terms of environmental and social costs, the outcome has overwhelmed the national and global economies. The house of cards came down. I wonder how many people who were happy that their taxes were being cut and cut and cut, are happy now?

It is unlikely that it could have been avoided. The storm clouds of a tax increase battle have been gathering over Pennsylvania since late last year. Once the economy went into a tailspin, it was inevitable that state tax revenues would decline, because the things on which state taxes are based diminish in frequency, value, and amount. When state revenues fall, there are three options: increase taxes, cut spending, or find some combination of those two choices. States cannot print money, and the borrowing for operating budget purposes isn't an option under the state's constitution, which requires a balanced budget. Pennsylvania's governor is a Democrat. The Senate is controlled by the Republicans and the House by Democrats, but barely. The governor is a lame duck, barred from seeking a third term. The stage is set for some intense negotiations.

At first it appeared that the shortfall could be covered without increasing the sales or income taxes and without chopping into state spending. Not long thereafter, as predictions of additional revenue shortfalls are made, the prospect of spending cuts loomed over the state capital. Fast forward a few months, and as the size of the shortages in the state budget continued to increase, murmurings of increases in the state income tax among some Democratic legislators could be heard. The governor responded by expressing his dislike for an increase, but refused to take a position opposing it. During the next few weeks, he continues to distance himself from an increase even as Democratic leaders in the House start to go public with the idea. Last week, the governor switched gears, announcing support for a "temporary increase" in the income tax, for as long as three years. This paragraph summarizes a more detailed chronology found here.

According to a a variety of sources, including this report, the governor is proposing an increase in the state income tax from 3.07 percent to 3.57 percent. Because the existing rate is so low, as state income taxes go, a one-half of one percent increment amounts to a 16 percent increase. An increase from 3.07 percent to 3.57 percent would increase state revenue by 1.5 billion dollars annually. That's assuming, I suppose, that the taxable income of state residents does not continue to decline as the economy limps along. The state income tax rate was last raised in 2003, from 2.8 percent to 3.07 percent, after the current governor managed to convince the legislature to go along with his budget plans. The increase in question would add roughly $20 a month to the state income tax liability of someone earning $50,000. Because the Pennsylvania income tax does not apply to pensions or social security income, it will have little effect on retirees other than those with significant investment income.

Republicans in the legislature are adamantly opposed to any increase. Because they control the Senate, they can prevent enactment of the proposal. Republicans argue that there is no such thing as a temporary tax increase and that the budget solution is to cut spending, principally welfare and education. Some Democrats also keep their distance from a tax hike, but for practical rather than philosophical reasons. Next year is a re-election year, and every incumbent Democrat who votes for a tax increase surely will be opposed by a tax-resistant Republican. Republicans also oppose the governor's attempt to tax natural gas extraction, an activity expected to become very prevalent now that there are more efficient ways of getting natural gas out of enormous existing and newly-discovered fields in the state. As a footnote, almost twenty years ago Pennsylvania's income tax rate was increased, and then after a year, dropped, though not back to the rate it had been before the increase. It is possible for temporary tax increases to remain temporary.

Republicans argue that a tax increase is wrong because there are "so many . . . being laid off, being required to work reduced hours, and worrying about how to pay their mortgage." Though tax increases don't affect people who have no jobs and thus no state income tax liability, they do have an adverse impact on those whose income has been reduced. The governor responded by pointing out that the spending cuts proposed by Republicans will eliminate even more jobs, reduce the opportunity to create new ones, and have a long-term adverse effect on the income-generating capacity of the state's citizens. Uneducated people, it should be noted, have a tougher time finding jobs and a smaller chance of finding jobs that pay enough to get by, let alone live comfortably.

The governor claims that a tax increase is "inevitable." He points out that he has already cut spending during the current fiscal year, and has trimmed a good chunk of spending from his proposed budget for the upcoming year. But even with those cuts, he argues, the state income tax needs to be increased. Why did he change his position on the tax increase? During the past four months, the state's estimated revenue for the year fell by $1 billion.

So the budget battle lines are drawn, and the skirmishing has begun. The Senate passed a budget that did not contain tax increases. A House committee tossed it out. One more bit of information needs to be added to the mix. If a budget is not in place by June 30, the state's spending authority terminates. Observers predict that the chances of a budget being approved by then are slim to none. Some commentators think that the governor is using the threat of an income tax increase as a negotiating ploy. Lobbyists are chiming in, with statements as predictable as their employers or sponsors, and their arguments simply repetitions of the same tired claims trotted out every time taxation is debated. Those opposing taxes point out that citizens will howl in anger if the income tax, the most disliked tax, is increased but don't mention the screaming complaints that will be heard once people figure out what gets cut if taxes are not raised. Those seeking to raise taxes argue that spending cuts will worsen the short-term employment situation and the long-term job opportunities of today's students, but brush aside the claim that tax increases will cause businesses and perhaps even residents to locate elsewhere. Considering that almost every state faces budget deficits and isn't reducing taxes, the number of options available to those seeking to increase a small income tax increase is rather limited. A curve ball in the situation is that cuts in state funding of public education will ensure increases in local property taxes, another tax that isn't well liked. Come to think of it, what tax isn't disliked?

Knowing that no one wins if a budget is not enacted by June 30, the governor announced, according to this report, that he's open to a stopgap budget. This would permit the state to continue operations, to issue paychecks to state employees, to keep state offices open, and to continue providing state services. Republicans reacted favorably, saying they are "willing to have a conversation." But at least one Democrat noted that since stopgap budgets need to be negotiated, it makes more sense to negotiate the budget in its entirety.

A stopgap budget is just that. It's a cease-fire, and not a truce or a cessation of hostilities. As one legislator said, "The disadvantage [of a stopgap budget] is that it would only postpone the day of reckoning." As alarming as it may seem for June 30 to arrive with no budget in place, since the governor took office six years ago, the number of budgets that have been enacted by the deadline is a grand total of zero. Yes, zero. But in none of those years was the situation so serious and the division between the two camps so wide. And in some of those years the state government partially shut down. In none of those years was a stopgap budget used, because it has been 32 years since there has been one. The governor admitted he did not know how the process worked, and assumed there were legislators who do. There probably are a few state legislators who were in the House or Senate in 1977. But what might they remember?

The only way this logjam is going to be broken is if the state's citizens bring pressure on law makers to stop the political posturing and get to work on the details. Both sides need to disclose fully and fairly the impact of their proposals. It's not enough just to tell someone earning $50,000 that he or she is looking at a $20 state income tax increase. It's not enough just to assert that cuts in spending would cause harm. The proposals need to be described in sufficient detail so that people know how many state offices will be permanently closed, which programs would terminate, which jobs would be eliminated, and which services would cease. For example, simply saying that x number of driver license renewal centers would close doesn't hit home. People figure it will be someone else's inconvenience. When the impact is seen after the fact, people don't have the same leverage that they do when the issue is under discussion. Local school boards need to announce what would happen if state funding for public education is cut by y percent or z percent. How much higher will the next property tax increase be? How many sports will be cut? How many teaching vacancies will go unfilled? Perhaps when all is said and done, the opposition to taxes that is funded and driven by those who can most afford to pay what needs to be paid will be overwhelmed by the demands of a citizenry for a government that is responsive to them and not to the adherents of a tax policy that failed at the national level and will fail at the state level, as it has, for example, in California.

It started rather simply. An OECD report informed us that the nations whose people ranked the happiest in a new survey are those with tax rates among the highest. In The Happiest Taxes on Earth, Thomas Kostigen suggested that the reason for this phenomenon may be that these particular nations provide so much for their citizens that their taxpayers feel that they get something in return and know what it is, whereas in the United States people "are never really quite sure of what we get in return for paying them, other than the world's biggest military." Kostigen noted that people who worry about being able to get health care and other services tend not to be happy.

In Pay Taxes, Be Happy, I examined Kostigen's premise, and suggested that another factor for unhappiness with taxes is the perception, on the part of some, of taxes as nothing more than a reduction in the possibilities of accumulating wealth. I noted that if the extent to which governments provided needs was the determinant with respect to happiness and taxes, then one would expect the deepest unhappiness about taxes to come from those whose basic needs have not been met, but yet the crusade for the elimination of taxes on everything but wages has been led by those already swimming in huge amounts of wealth. My thoughts and questions brought a response from Peter Pappas, in Tax Happiness: Inventors of Sauna Happier than Inventors of Polio Vaccine. He suggested that Americans "have created more life-altering inventions and made more evolution-enhancing discoveries than the rest of the world combined . . . because they are empowered to do so by a system that forces them to rely on their own merits" and then posed questions both to Kostigen and myself. I replied in Forget Lives, Liberties, and Happiness: The Pursuit of Wealth and Power , explaining that although no one knows why some people are so intent on "making a killing" and accumulating far more wealth than is necessary to live comfortably or even luxuriously the cost to society of that behavior is too high. I also pointed out that his assumption that people in high-tax countries have produced far fewer "objective accomplishments" than have Americans was factually questionable. Pappas rejoined in Tax Law Professor James Maule Responds, arguing that "pursuers of great wealth" are good for society. In Making A Living but Not a Killing: The Discordant Symphony of Wealth Creation and Wealth Grabbing , I elaborated on my position, highlighting the differences between wealth creators and wealth grabbers, emphasizing the tendency of the former, and their supporters, to resist taxation designed to marginalize the latter through higher taxes on exceedingly high incomes because they somehow consider taxation of the excessively wealthy to be a threat to entrepreneurs who are trying to "make a living" rather than "making a killing."

Now Andrew Oh-Willeke, of Wash Park Prophet, has joined the fray. In Maule on Wealth, he explains that my position is "strikingly negative about what is involved in becoming and being wealthy" and then proceeds to explain why he disagrees with me on "multiple counts." Let's take a look.

Though agreeing that "business enterprises frequently engage in conduct that harms the environment and produces worker injuries," Oh-Willeke contends that these harms would exist whether business leadership are eking out a living or raking in the bucks. He contends that "some of the most environmentally destructive businesses in the world, and often also the most hazardous to workers, are small, family owned farms, logging operations, and mines owned by people who are just barely getting by." After decades of reading about the disappearance of family farms and the rise of mega-agribusiness and the conglomeration of formerly small logging and mining operations, after several years of reading about and seeing the impact of mountains being cut down to hills by huge mining companies, I find it very difficult to buy the mega-business line that, "It's not us, it's the little guy" because there just aren't very many little guys out there anymore. Box stores have killed the little guys on Main Street, acquisition-greedy corporations have swallowed up the competition and even enterprises in other industries, handing their CEOs tens of millions or more for accomplishing these decrements in competition, and monopolies and oligopolies dominate too many industries. In any event, the few "small, family-owned" businesses that are just scraping by are in no danger of being affected by my proposals to increase tax rates on annual incomes exceeding $1,000,000 and to increase even more the tax rates on annual incomes exceeding $10,000,000. If these small, family-owned enterprises want to survive the next round of mega-corporation expansion, they'd be wise to jump on board my proposal.

Oh-Willeke then argues that "the vast majority of revenues generated by the vast majority of businesses" generate "modest salaries for ordinary workers and often modest returns for investors some of whom are mere ordinary individuals saving for future middle class wants and needs." This is true, but it misses the point. Oh-Willeke adds, though, that "what we define as 'profit' … is usually a minority of revenue, and senior executive compensation … is usually a small fraction of average profit and an even smaller fraction of business revenues." So what? Whether the person earning $50,000,000 a year is running a business that generates profits of $30,000,000 or $300,000,000 doesn't change the relative value of a $50,000,000 annual income nor does it change what the person earning that income does with it. Nor does the ratio of compensation to revenue or to profit change the harm that is generated when a company, in order to pay the $50,000,000, cuts jobs. Worse, there are more than a few instances where huge salaries for upper managements are being paid by enterprises generating little, if any, profit for the modest investor and cutting wages for the rank-and-file. Add to those economic harms the costs to individuals and other businesses who must endure or whose employees must waste time sitting on hold trying to deal with a broken product, malfunctioning software, garbled paperwork, or nonresponsive suppliers because there are too few employees as a consequence of the layoffs undertaken in order to preserve the high-end salaries. Again, though some think that the interests of the employees with modest salaries and the investors saving for future middle class wants and needs dovetail with those of the mega-wealthy, that sort of thinking is precisely what the mega-wealthy want to happen, because it lets them hold middle America hostage for their greed and power games.

Oh-Willeke also disagrees with my contention that wealth is created through labor. He thinks "[i]t would be nice if something like a labor theory of value … was supported by strong economic data." He gives as an example, the experience in Zimbabwe with its productive agricultural lands. Formerly owned and managed by a "few thousand white plantation owners," and worked by native Zimbawean labor in an arrangment "the nature of [which] looked a lot like the pre-Civil War American South," the farms were seized by the government and given to the farm workers. Everything went amok. Of course it did. As Oh-Willeke explains, "the farm workers were not up to the task of managing the land. . . . the plantation owners knew how to run their farms, while their workers did not." And why not? The answer is that they lacked education. Their wages did not permit educational opportunities of the sort needed, the government did not collect taxes sufficient to provide educational opportunities of the sort needed, and that country was afflicted with monopolistic or oligopolistic control, depending on whether one views the former system, of educational opportunity.

Oh-Willeke disagrees with my assertion that "By definition, the 'pursuers of great wealth' must exploit others and damage the world, for if they were not to do so, the world's resources would remain distributed among all people in rather even distribution, with variations of far less magnitude than exist today." First, he notes that the "most downtrodden" are more in a position of irrelevance than exploitation because they "don't participate in, or have a connection to, wealth creators in the economy." I disagree. These people are seriously affected by national and global economies. They are far more likely to live in areas of air, water, and land pollution precisely because they lack the clout, translation, economic resources, to resist having their homes treated as the world's dumps. The are far more likely to be pushed aside if their lands contain resources of any value. Because they have nothing in the economic sense, they are far more vulnerable to being hauled off, voluntarily or involuntarily, deceptively or honestly, to exploitative situations. Second, Oh-Willeke, though admitting that the "world certainly isn't free of exploitation," claims that "those who participate in creating wealth, even as 'replaceable underlings' typically come out far ahead of those who aren't involved at all." This is the "something is better than nothing so be grateful for the crumbs from the table" argument. During the nineteenth century, pro-slavery advocates often argues that slaves were better off as slaves on plantations than they would have been "back in Africa." Even if true, that does not make it right, nor does it mitigate, let alone justify, the harms that were being done by the exploitation. Oh-Willeke, though, uses as his examples situations involving what appear to be consensual arrangements, namely, people settling for low wages or even modest wages paid by someone with a huge income, people who theoretically have the choice to turn down the job. The problem is that there is no choice when a person has children to feed, and a family to house. This is why minimum-wage jobs exist and find takers, often far more qualified than the position warrants. Employers know that hungry people aren't in an equal bargaining position. Oh-Willeke's example of China as a place where the workers are better off than the peasants is but a limited snapshot of an economy and culture that is reeling from the true costs of a nascent ultra-wealthy class. The Chinese system does not pay the costs of the environmental damage that it is imposing on the country, and if that cost were met rather than deferred, the workers would be no better off than the peasants though the elites would be making good use of the lessons that they have learned studying the practices of the ultra-wealthy in other nations and cultures.

Oh-Willeke then argues that it is easier to "restrain, regulate and redistribute earnings from the externalities created by large enterprises than it is to do the same with small enterprises" because [b]ig businesses are easier to regulate and have a harder time simply cheating on their taxes -- they manipulate and twist the tax rules, but, with rare exceptions, follow them." So we are to believe that it's the "little guy" who sets up the controlled foreign corporations, the hidden Swiss bank accounts, the offshore trusts, and the subsidiaries in the Caribbean? I think it's the opposite. The big businesses are so big and have so many resources that they can afford not only to set up tax avoidance mechanisms but also to hide what they are doing from an overworked, out-resourced, and out-numbered IRS audit team. How many tax shelter cases involved individuals and companies with incomes or revenues, respectively, of less than $250,000? How many involved individuals and companies with incomes or revenues, respectively, in the millions? To the extent the "little guy" is cheating, it's because he sees what the ultra-wealthy are doing. It's because he knows that the middle class faces higher average marginal rates than do the ultra-wealthy.

Yet in the end, Oh-Willeke backs down. He accepts that "those who have more have no obligation to share with those who have less, as a price for conducting business in an orderly society, like the United States, as opposed to one where government is ineffectual, like Somalia." So unlike those who want to reduce or eliminate taxation on everything but wages, Oh-Willeke is taking a position that leaves us arguing, ultimately, about the rates that should be imposed on those million-dollar incomes. But the truly disturbing and yet hopeful revelation is this one from Oh-Willeke: "I am no longer nearly so convinced that behind every great fortune is a great crime, as I was a couple decades ago." Some of what happens when great fortunes are amassed isn't, technically, criminal. But I don't think that's what Oh-Willeke means. I think he means that he once thought as I do now, but that something changed his mind. What was it?

Roger Corbin is hoping that you don't. Get the picture, that is. The picture of Roger Corbin being arrested, cuffed, and taken to jail on charges of tax evasion. Actually, it's not a picture, it's a bundle of pictures. News photographers aren't known for snapping just one exposure. But why would news photographers show up, along with reporters and other journalists, at an arrest? The answer is that Roger Corbin is a member of the Nassau County, N.Y., legislature. In other words, he's someone in whom the public is interested, especially when arrested and charged with tax fraud and lying to federal agents.

Corbin, not suprisingly, claims he is innocent. Charged with taking money from a developer involved in a federal contract in the region, and not reporting it as income, Corbin at first told federal agents that he had not received the money. That was back in November of last year. A few weeks ago, Corbin disclosed that he had lied when answering questions at the November interview with the federal authorities. With almost a quarter of a million dollars at issue, Corbin is looking at approximately $70,000 in unpaid taxes, interest, penalties, fines of up to $1,000,000, and probable prison time if convicted. And there's more. Surely New York State and the various local jurisdictions will ride the outcome of the federal litigation to collect the state and local taxes due on the amounts that were received and unreported, if those allegations are proven.

Yet at the moment Corbin's primary attention isn't on the charges of tax evasion and lying to federal agents. Instead, he asked the court to block several news publications from using the pictures that were taken of him during the arrest. One photo can be found in this Newsday story about the arrest. Newsday is one of the news outlets involved in Corbin's complaint. Despite arguing that the pictures generate prejudicial publicity by the government, Corbin failed to persuade a federal judge to block publication of the photos.

It gets worse. Corbin's attorneys decided to appeal the judge's decision. But the judge ruled that his decision cannot be appealed and refused to issue a certificate of appealability. He explained that none of the exceptions permitting a defendant to appeal before being convicted were applicable in the case. The internet being what it is, and the photos having been published, the issue quickly became moot, because there is no way that the photos in question could be retrieved and removed from the public eye.

The issue is a difficult one, even though the law is about as clear as the law can be. Photos of a someone, even a politician, being arrested have negative effects on that person. Whatever reputation the politician had is tarnished. The politician's re-election prospects almost always are damaged. Finding an unbiased jury becomes more difficult. If the charges turn out to be false, or cannot be proven, it is almost impossible to rehabilitate the person's reputation and standing in the community. On the other hand, legislators are public servants. When charges are brought, they ought not be hidden from the public, and if the person is arrested, that event is news. It makes it even more essential for politicians to steer very clear of questionable financial practices and to be very careful when filing tax returns.

The payments that Corbin seems to have admitted having received were received in private. Perhaps the publicity accorded the arrest should be extended in some way so that money cannot change hands with a legislator in private settings. How that could be implemented is as dicey a challenge as is striking the balance between adverse publicity and the public's right to know.

Proposals to impose taxes on sugar-containing beverages and to increase taxes on alcohol have resurfaced, this time at the federal level, as suggestions for coming up with the funds required to implement any sort of serious health care reform.

The sides are shaping up in the debate. For example, the Center for Budget and Policy Priorities thinks such a tax makes sense. On the other hand, In The Return of the Soda Tax Proposal, focusing on the one-cent per ounce tax on sugared drinks prposed by Kelly D. Brownell, director of the Rudd Center for Food Policy and Obesity at Yale University, I concluded:

I simply don't think that a tax on sugar-containing beverages, or even a tax on supposed unhealthy foods, will make a difference, because it doesn't attack the root cause of the problem. What activity or item can be taxed when the problem is a psychological one rooted in lifestyle and culture? Even if it could be identified, and I don't think it can be, would it be appropriate to tax it? No.

A google search for " sugar beverage tax 'health care reform'" turns up thousands of hits. Everyone has an opinion.

The advocacy for and against increases in the scope and level of so-called "sin taxes" has brought all sorts of rhetoric to the table, but none tops this comment from Representative Stephen Lynch of Masachusetts, as reported in this BNA article. According to Lynch, "I have one of the most Irish districts in the United States of America and there are folks in my district that would consider a massive increase on the beer tax as a hate crime.” It might be worth noting that Lynch's district includes brewers Samuel Adams and Harpoon.

There are people who hate taxes, and there are people who think that this nation's labyrinth of tax systems is a crime, but this is the first time I've seen or heard taxation described as a hate crime. Lynch's comment can be seen as itself a hate crime, a notion raised by John Cummings in his BizTaxBuzz post on the issue. He simply notes, "No reports yet on whether any of Mr. Lynch’s constituents regard this statement itself as a hate crime." Cummings does not explain why the comment itself might be a hate crime, but one wonders about the implications in the statement by Lynch. The connection between people of Irish descent and drinking, a stereotype prevalent in culture beyond Lynch's observation, suggests both that Irish descent makes drinking inevitable and that there is some sort of Irish monopoly on alcohol consumption of the sort to generate these types of comments. In Drinking Occasions, Dwight B. Heath explains, citing Richard Stivers, "Hair of the Dog: Irish Drinking and American Stereotype, "The stereotype of Irish drinking and drunkenness is still often applied to Irish-Americans, although they actually have a much higher rate of abstention than most other segments of the U.S. population."

Although it appears Cummings was correct when he stated, Sin Taxes Fizzle in Congress, the more troubling aspect of the discussion is not that the proposal was made, for thinking through a proposal, no matter its feasibility, is educational, but that it generated the sort of comment that Lynch put forth. It's troubling not only that he milked a stereotype to make a point that could have been made in other ways, but that he equated taxation to a hate crime. Considering what has happened in the past several weeks in this nation, as violence unquestionably qualifying as hate crimes erupted in too many places, he could have found a better choice of words. Taxation is not a hate crime.

In Forget Lives, Liberties, and Happiness: The Pursuit of Wealth and Power, I responded to two questions posed by Peter Pappas of The Tax Lawyer's Blog. Today, in Tax Law Professor James Maule Responds, Mr. Pappas makes some important and thought-provoking points in his rebuttal. It helps to read these three posts before wading into this one. Mr. Pappas explains that in his comparison of the "wealth-creation artist" to the "symphony-creating artist" he "assumed that each would not pursue their art by engaging in immoral conduct" but that I begin "with the premise that anyone who desires great wealth must be willing to harm others and the environment in order to achieve that end" but that I don't "make the same assumption about the music composer." He's right, except that these aren't premises, but observed outcomes.

Mr. Pappas points out that among composers and other artistic talents one can find people who are "equally or more obsessive and ruthless in pursuit of his or her art than is the wealth-seeker." Absolutely. I did not intend to suggest that all symphony-creators were paragons of virtue, goodness, and sinlessness. Oddly, two of the three examples provided by Mr. Pappas involve artistic genuises who did themselves in, perhaps before they had a chance to engage in or extend the ruthless behavior that otherwise awaited the world. I did intend to suggest that "wealth-seekers" who succeed in accumulating amounts far in excess of their needs do end up, sometimes intentionally, sometimes unwittingly, and almost always remorselessly, imposing huge costs on others, excessively harming the environment, unduly putting the economic well-being and security of nations at risk, engaging in monopolistic or oligopolistic behavior, riding on the backs of others, and unduly infringing the rights of others. By definition, it is impossible to accumulate huge amounts of wealth without pushing others aside, a fact demonstrated by the repeated and unrelenting pursuit of monopolies and oligopolies by the wealth-seekers. In other words, it is possible to become a great artist without exploiting others or damaging the world. By definition, the "pursuers of great wealth" must exploit others and damage the world, for if they were not to do so, the world's resources would remain distributed among all people in rather even distribution, with variations of far less magnitude than exist today. Borrowing from Mr. Pappas, "to suggest otherwise flies in the face of human experience."

Mr. Pappas notes that "the pursuer of great wealth" benefits society by supporting his or her own family and extended family, creating jobs, contributing to charity, paying taxes, and meeting the demand for goods andservices. I disagree. The people who are doing these things aren't pursuers of great wealth. They're pursuers of making a living through independent action. They're entrepreneurs. They probably do provide more for society than do symphony-creators if one accepts a measurement of worth that reflects dollars and that precludes psychic value. No matter, the point isn't whether entrepreneurs are more worthwhile than composers, but whether the power-hungry pursuer of great wealth is a benefit or burden to society. Unfortunately, some of the world's power-hungry wealth pursuers began as enterpreneurs and then ran amok, giving entrepreneurs a bad name. Entrepreneurs create wealth. Wealth seekers desire and take the wealth created by others.

It is important to understand the distinction between a wealth creator and a wealth seeker. The slaves on the Southern plantations created wealth. One problem was that they ended up with very little of it, just barely enough to survive. The same can be said of the track and yard workers employed by the railroad barons and the migrant farmworkers employed by huge agribusinesses. The argument that entrepreneurs create wealth is a truism that misses the point. Yes, entrepreneurs contribute to the creation of wealth by providing services in the management of workers, the organization of projects, the implementation of ideas. And most entrepreneurs generate some modest amount of return, compensating them for their efforts. Most entrepreneurs earn not much more than their employees. Most entrepreneurs don't try to stomp out their competition. Most entrepreneurs end up being destroyed by the monopolists and oligopolists. Most entrepreneurs are wealth-creators, but they, just like the workers, become the victims of the wealth-grabbers.

As the wealth-grabbers muscle their way into domination and control of a market, entrepreneurs face the choice of closing up shop, caving in and selling out, or becoming yet another money-grabber. Whether the product is illegal drugs or operating system software, black market alcohol or telecommunications, this is how the modern but damaged capitalist system plays out. Greed, and psychological addiction to money and power, infect the market place. Among the billionaire wealthy are those who claim they needed to do what they did in order to survive, while their employees scrape by on minimum wage. Survival for the latter means this evening's dinner, whereas survival for the former means keeping within striking distance of whoever currently tops the asset ownership list.

The problem isn't the entrepreneur who earns twice or three times, or even ten times, the average compensation of his or her employees. It's the CEO or conglomerate owner who pulls in pay and perks that are thousands and tens of thousands times the average salary of the rank-and-file. However one puts a value on what the wealth-seeker creates, it surely isn't tens of thousands times the value of what the minimum wage employee produces. Either those employees need hefty raises, or the CEO and conglomerate owner need pay cuts. For those who claim that CEO and similar pay is determined by "the market," keep in mind that few people enter that market, that it is a market frequented and controlled by a handful, and that the reciprocal and mutual treasure-dividing is out-of-bounds for most people, including the entrepreneurs who seem to think that criticism of the wealth-grabbers threatens the well-being of the wealth-creating entrepreneur.

Joe Kristan, of Tax Update Blog, commented on Mr. Pappas' post by adding "well-meanng meddlers who hobble honest wealth producers with high taxes and foolish regulation cause far more harm than dishonest wealth-seekers." Joe and I will need to agree to disagree on this one. If the wealth-grabbers didn't hobble the environment, would we not see reduced government spending on, and thus less need for taxation to fund, environmental remediation? Would we not see less need for environmental protection regulations? If the wealth-grabbers paid living wages instead of controlling markets so that a store manager was valued at 1/10,000th of the CEO, would we not see reduced government spending on, and thus less need for taxation to fund, social services? If the wealth-grabbers' companies funded the rank-and-file retirement plans as generously as they do those of the big-wigs, sould we not see reduced government spending on, and thus less need for taxation to fund, social security? Would we not see less need for deferred compensation regulation? If the greed merchants made full and fair disclosure and did not package junk into derivatives, would we not see reduced government spending on, and thus less need for taxation to fund, rescue of the afflicted? Would we not see less need for financial market regulation? The saddest part of the entire debate over wealth and taxes is that the very rich have persuaded the not-very-rich into arguing for the very arrangements that, if continued, will guarantee increasing centralization of wealth in a very few and continued destruction of the wealth-creating, make-a-living-not-a-killing entrepreneur. Increasing income tax rates, for example, on taxable incomes exceeding $1,000,000 and increasing them even more on taxable incomes exceeding $10,000,000 isn't going to hamstring the honest make-a-living entrepreneur, but it should provide some, hopefully enough, disincentive for the amassing of even larger accumulations of wealth and attendant incomes through the make-a-killing lifestyle. Given the choice between letting an elected government take the money and run things, or letting a self-appointed nobility, excuse me, oligopoly, take the money and run things, I'll vote for the former.

Mr. Pappas concludes by pointing out that "many great artists have been funded by rich patrons." Patrons, he notes, that are the "very same types he castigates as obsessive, greedy and dysfunctional." He claims that "[w]ithout a Lorenzo de Medici there would have been no Michelangelo." We don't know that. Absent a parallel universe, there's no proving nor disproving this claim. We do know there was a Michelangelo doing things before he connected with the de Medici. We do know that he eventually came to realize that repressiveness of the de Medici wasn't worth it. Surely an apologist for the de Medici might claim that THEY (not only Lorenzo but his son and others) created the art of Michelangelo. Hah. And even if it could be proven that Michelangelo would have accomplished less than he did, or nothing, it would not have justified the behaviors of the de Medici. A few centuries later, in the same European peninsula, someone discovered that making the trains run on time isn't enough to justify the greed. In the long run, wealth grabbing is a very poor idea.