Saturday, September 08, 2012

Human Rights, Crepes, and Caviar

"She [Ms. Clinton] raised the issue of human rights and recent moves by Russia to restrict nongovernmental organizations during a private breakfast of crepes and red caviar with Foreign Minister Sergey V. Lavrov, a senior State Department official said." Myers & Herszenhorn, Clinton Tells Russia Sanctions Will End, but Congress May Disagree (September 8, 2012):
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Thursday, September 06, 2012

AI & Evidential Inference

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Spindle Law Interview: Carlyn McCaffrey

Spindle Law Interviews: Carlyn McCaffrey

August 8th, 2012 by Nicholas Diamand
Carlyn McCaffreyCarlyn S. McCaffrey is a partner at the law firm of McDermott Will & Emery LLP and is co-head of the firm’s private client practice in New York.  She focuses her practice on tax and estate planning for high net worth individuals.
Carlyn frequently lectures and writes on subjects relating to tax law, trusts and estates, foreign trusts and matrimonial law. She is also an adjunct professor of law at New York University School of Law and the Miami Law School. She received her J.D. and LL.M. from New York University School of Law and her B.A. from George Washington University.
Carlyn is a fellow and a past president of the American College of Trust & Estate Counsel, a fellow of the American College of Tax Counsel, a member of the International Academy of Trust & Estate Counsel and a member of the Joint Editorial Board for Uniform Trust and Estate Act of the National Conference of Commissioners on Uniform Laws.  She serves on a number of boards and advisory boards, including the Board of Directors of the Catholic Communal Fund, the Board of Directors of the Breast Cancer Research Fund, The Metropolitan Museum of Art’s Professional Advisory Council, The Museum of Modern Art’s Planned Giving Advisory Committee and the Professional Advisors Council Committee of Lincoln Center for the Performing Arts, Inc.

Spindle Law: Who inspired you to become a lawyer?
Carlyn McCaffrey: I didn’t know any lawyers when I was young.  But I loved the Perry Mason television show; he made the law look like a very exciting way to make a living.  Of course, when I became a lawyer my practice turned out to be nothing like Perry Mason’s.
Early in my career, my mentor was Len Schmolka who, at the time, was a partner in the trust and estates department at Weil, Gotshal & Manges.  After clerking and after I obtained my LLM in tax at NYU, I taught for six years, the last four in NYU’s tax masters program.  At that point, I decided it would be a good idea to get more practical legal experience.  Len was an adjunct on the NYU faculty and he persuaded me to come to Weil where he was a partner.  I took a leave of absence from teaching to join Weil.  He made it such a wonderful experience that I never went back to full-time teaching.
SL:  What first attracted you to this type of practice?
CM:  I started out wanting to be a tax lawyer. What attracted me to tax law as a student was the intellectual challenge of working through code provisions and finding solutions to problems.  When I started to teach at NYU Law School, the school asked me to teach the basic trust and estate course in addition to tax.  The course introduced me to that field.  I liked the intellectual challenge and the personal interest aspects of the field.  When I joined Weil, I went into its trust and estate department which gave me the opportunity to combine tax and trust and estate work.   Over the years, what I’ve enjoyed the most about it is working with people as people.  Most big firm lawyers work with people, of course, but usually in their representative capacity as officers of  huge enterprises.  But, in the “private client practice” as we call it, we work with individuals on individual problems while, at the same time, working through the intellectual challenge of the tax law.  That’s what I like about it.
SL:  And how has that practice changed in the course of your career?
CM:  In some ways, it’s easier and, in some, it’s harder.  The technology has been amazing.  When I started practicing, wills were done on paper with carbon paper.  If you made a mistake, you had to do the whole page over again.  Now, every associate I work with basically does his or her own document production on a computer so it’s become a lot easier.  The actual putting together of the documents, once you’ve figured out what you want to do, is a lot easier.  On the other hand, the law itself has become enormously more complicated in the more than thirty years that I’ve been practicing.  Every year, the complexity increases.  We can no longer rely on the law remaining the same in my area from one year to the next.  For example, as you probably read, 2010 was a bizarre year when there was no estate tax.  And last year and this year, while everybody has the possibility of giving away $5 million without any gift tax, unless Congress changes its mind again, the limit will go back to $1 million next year.  So, there’s a lot of change and a lot of complexity.
SL:  Are there aspects or elements of the tax policy that you would change if you could?
CM:  It’s essentially the converse of what I said before.  If there were more stability and a lot less complexity that would be a good thing.  It doesn’t look like it’s going to happen though because the trend has been in the opposite direction.  When I first started studying tax law, in the late ‘60s and early ‘70s, we had one volume for the tax code and two volumes of regulations.  We now have two bigger volumes for the tax code and the regulations go all the way up to six good-sized volumes.
Second, the legislative process clearly doesn’t work very efficiently.  A substantial number of the people who vote for these bills don’t really know what they’re doing.  They’re advised by members of their staff and some of them listen to people who want particular exceptions built in to encourage particular kinds of industry or to discourage other kinds of activities.
SL:  In Commissioner of Internal Revenue v. Newman, 159 F.2d 848, 850-51 (2d Cir. 1947), Judge Learned Hand wrote:  “Over and over again, the courts have said that there is nothing sinister in so arranging one’s affairs as to keep taxes as low as possible. Everyone does so, rich or poor; and all do right, for nobody owes any public duty to pay more than the law demands:  taxes are enforced exactions, not voluntary contributions.  To demand more in the name of morals is mere cant.”  Is this as true today as it was in 1947?
CM:  That kind of sentiment is familiar.   Congress has encouraged people to set up structures that exist for the principal reason of reducing income taxes.  However, a couple years ago, back in 2010, Congress codified a rule called the Economic Substance Doctrine.  This rule says that, in order to be considered valid, any transaction that you put together has to have an economic purpose aside from the reduction of tax liability.  There are certain standards you have to comply with to show that there is an economic purpose in the transaction besides the reduction of tax.
On one level, it’s a good thing because it’s discouraging some of the abusive tax shelters.  On the other hand, because the statutory standard is so vague, people are uncertain as to exactly what kind of transactions it’s going to encompass.
SL:  In a recent New York Times article, A Family’s Billions Artfully Sheltered, it reported that “[t]he tax burden on the nation’s superelite has steadily declined in recent decades, according to a sliver of data released annually by the I.R.S.  The effective federal income tax rate for the 400 wealthiest taxpayers, representing the top 0.000258 percent, fell from about 30 percent in 1995 to 18 percent in 2008, the most recent data available.”  Is this consistent with your experience?  And, how do you explain it?
CM:  It’s not particularly surprising because the tax rates have gone down.  When I first started to practice, they were 50%, now they’re 35% and, most importantly, capital gains rates which used to be at least half of the top tax bracket, are now down to 15%.  And the dividend rate is down from 50% to 15% so the truly wealthy people, those who make their money through investments rather than salaries, are more likely to pay capital gains rates or dividend rates than people who work for a living.
The statistics are somewhat misleading because, when you’re looking at the 15% rate on dividend income, you should keep in mind the fact that, before the corporation can give its shareholders dividends on which they pay a 15% tax rate, the corporation has already paid a 34-35% federal tax.  In other words, the effective tax rate on corporate earnings that are available to individual taxpayers has gone through two tax systems before it gets there.
SL:  What do you think the most important development in the legal profession has been in the last 25 or 30 years?
CM:  One of the things that has changed between then and now is the increased diversity among members of the profession, particularly in the case of women. When I went to law school, there were only four of us in my class and it was very hard for women to get jobs in a major law firm.  Now women are accepted on a fairly equal basis.  In addition, people of different racial and ethnic backgrounds, different religions, and different gender orientations have entered the profession in increasing numbers.  The big firms make an effort to put together a diverse group of associates and, ultimately, partners.  This has made a huge difference in the way law firms look than the way they looked in the late ‘60s.
SL:  Other than the increased number of women in the profession, have you seen changes as to the role of women in the law?
CM:  Because of technological advances and an increasing emphasis on the need for diversity, many big firms now provide career paths for women and others with flexible work hours.  For young people, particularly women, who want careers and a family, this is obviously an important development.  When I first started, you had to have what they called ‘face time.’  You had to be at your desk or in your office eight to ten or more hours a day.  Now, it’s much more flexible; there’s not as much problem in having people work at home because the technology makes it possible for you to work at home without inconveniencing your partners or your clients.  There’s a lot more telecommuting which makes it easier for men and women who have family responsibilities to put in a full schedule, but just not every day in the office.  It has created more opportunities for people.
SL:  Are there issues that you anticipate to be hot ones in trusts and estates in the coming months or years?
CM:  There are a lot of hot tax issues.  For example, there will be tremendous pressure on the part of wealthy people to give away at least $5 million or $10 million this year with the fear that that’s going to disappear next year.  There’s the prospect that many of the techniques that have developed over the years to help people make gifts during their lifetime, as opposed to dying with all their wealth, are being looked at very hard by Congress and may be shut down.  They would include things like valuation discounts for minority interests in companies.  So, it’s a constant process of trying to anticipate what Congress is going to do next.
If President Obama wins and if the House becomes Democratic, we probably are going to see a significant decrease in the gift tax credit.  On the other hand, if the Republicans gain control, we might actually see a repeal of the gift tax because in the last 10-12 years they’ve been trying to achieve that.
SL:  Do you have advice for law students and new lawyers?
CM:  For those young professionals who are interested in a law career that has a lot of exposure to individuals and individual issues and, at the same time want the challenge of working with a complex body of law to solve interesting problems, trust and estates or private client work is a good choice.  Those who are interested in this field should give some thought to working for a Masters in tax law or in estate planning.

Putin as Icarus?

So Putin is flying amid the birds (Siberian cranes)? See 

Putin Pulls Off Latest Feat: Flying With the Birds

That's OK. Let's cut him some slack.

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Tuesday, September 04, 2012

New Published Papers in Law, Probability and Risk

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Tattoo Evidence: The New - the Old? - Gold Standard?

Curtis Krueger, Police say tattoo evidence ... helps catch more crooks Tampa Bay Times (Sept. 3, 2012):

Many Floridians have learned to their dismay that their unique ink can help police catch them — and persuade juries to convict them.

Tattoo evidence isn't as high-tech as DNA evidence, or as new. And a tattoo alone probably won't send anyone to prison without additional evidence to support it.

But tattoos have exploded in popularity, and police agencies increasingly photograph, catalogue and distribute them. ...

[snip, snip]

A few tattoos figure into "dumb criminal" stories from the Tampa Bay area and beyond. Take Sean Eric Roberts, accused in 2009 of breaking into a home in Riverview. He was identified by the outline of the state of Florida, helpfully inked onto his face.

And, in what may be the most bizarre example of body art imitating life, a California man named Anthony Garcia was convicted of murdering a man outside a liquor store. The case had gone unsolved until a Los Angeles County sheriff's sergeant was sorting through photos and saw one of Garcia's chest. It was covered with a tattoo depicting the murder scene.

But not every tattoo is helpful, said Mike Puetz, a St. Petersburg police spokesman and former homicide sergeant. All kinds of people seem to have inscribed themselves with crosses, hearts and skulls, so those don't exactly separate anyone from the crowd. But when a guy tattoos his girlfriend's name in cursive on his neck, that's a different story.

[snip, snip]

Police have checked out tattoos for decades, but computers now make the job easier. Many police agencies enter descriptions of tattoos into computer databases whenever people get arrested.

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Monday, September 03, 2012

More Slouches, More Drunkards, but More Innovators?

Michael Powell,  A Redoubt of Learning Holds Firm NYTimes (Sept. 3, 2012) (quoting Paul Nurse, President, The Royal Society of London for Improving Natural Knowledge a/k/a the Royal Society):

"'The U.S.A. has a very strong work ethic, and you keep a very close eye to the cutting edge,' he says. 'We are a bit lazier. We drink more. But sometimes the science we produce is rather quirkier and more innovative.'”


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