SelectedWorks @ Chapman University Dale E. Fowler School of Law
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Equitable Fiscal Regionalism
No full textDue to suburbanization and white flight, metropolitan regions suffer from great fiscal inequality. Wealthier, and oftentimes white, suburbs are able to keep their tax burdens low and receive high quality government services. In contrast, central cities, with many poorer and ethnic minority communities, face eroding tax bases and increased demand for social services. In response to this fiscal dilemma, central cities spend money to construct and operate assets, such as a sports stadium or music hall, in the hopes of spurring economic development that can create job opportunities for residents and increased tax revenues for the city. While such assets are desired and used by residents of the entire region, our current system of local government allows wealthier localities to enjoy these benefits without helping to pay for their costs. This dismal state of affairs is largely the product of localism, a descriptive and normative theory of a system of decentralized, independent local governments that fosters self-interest and unilateral decision making. Recently, a powerful critique of localism has emerged in the form of regionalism, a competing theory that recognizes the complexity and interdependence of cities. Regionalism argues that interlocal collaboration is necessary to address the ills of the modern metropolis, including the problem of fiscal inequality. Unfortunately, regionalism has failed to be adopted on a meaningful scale because it is politically or practically infeasible. Moreover, the regional governments that have been successfully formed have tended to reinforce inequality and free riding. In this Article, I propose a new, more viable theory of regionalism — “equitable fiscal regionalism.” This theory envisions a regional government that better distributes the cost of regional benefits throughout the metropolitan area. In doing so, equitable fiscal regionalism seeks to address the free riding by wealthier localities and help reverse the fiscal inequalities that exist in most regions. By using the example of sports stadium districts, this Article demonstrates how equitable fiscal regionalism can help find theoretical common ground for localism and regionalism and move toward bridging the gap between scholarship and practice in this important area
Repudiating the Narrowing Rule in Capital Sentencing
No full textThis Article proposes a modest reform of Eighth Amendment law governing capital sentencing to spur major reform in the understanding of the function of the doctrine. The article urges that the Supreme Court should renounce a largely empty mandate known as the “narrowing” rule and the rhetoric of equality that has accompanied it. By doing so, the Court could speak more truthfully about the important but more limited function that its capital-sentencing doctrine actually pursues, which is to ensure that no person receives the death penalty who does not deserve it. The Court could also speak more candidly than it has since Furman v. Georgia about the problem of inequality that has continued to pervade capital selection. If the Court remains unwilling to strike down unequal death-penalty systems, it should acknowledge the inequality and explain that the problem addressed by the Eighth Amendment is not inconsistency but retributive excess
Conflicts about Conflicts: Implications of the Tax Court Canal Corp Decision For Disciplinary and Malpractice Actions
No full textIn Canal Corporation v. Commissioner, 135 T.C. 199 (2010), the taxpayer\u27s subsidiary entered into a leveraged partnership arrangement pursuant to which it transferred its business assets to an LLC for a 5 percent interest in the LLC and a distribution of 524 million gain otherwise realized on the business assets transfer. The leveraged partnership structure had been suggested by PWC, an accounting firm, and was conditioned on PWC providing a “should” opinion to the effect that the structure would defer recognition of the gain, for which the court found that the taxpayer agreed to pay PWC $800,000, contingent on the transaction closing. However, modifications to the indemnity agreement (largely at the taxpayer’s request) so limited its potential application as to weaken the transaction’s tax viability. As a result, the court held that the transaction was a disguised sale of the sub\u27s business assets and upheld imposition of a substantial understatement penalty on the taxpayer. The court rejected the taxpayer’s reliance on the PWC opinion as supporting a reasonable cause, good faith defense against imposition of the penalty, stating that PWC had an “inherent and obvious” conflict of interest and that the opinion was based on unreasonable assumptions. Matters within the ordinary business judgment of the taxpayer’s executives, under this view, are the taxpayer’s responsibility, such as an “obvious” conflict of interest and unreasonable assumptions at odds with the taxpayer’s own view of the indemnity agreement. Canal Corp’s approach to the reasonable cause, good faith defense - placing the burden on the taxpayer to be wary of a conflict on the tax advisor’s part - is at odds with how both ethical rules and the law governing lawyers address conflict situations. Both the ethical rules and the applicable law require the tax advisor to inform the client of any significant conflict between the professional\u27s personal interest and the client\u27s interest, to determine whether the conflict is consentable, and to obtain the client\u27s informed consent before proceeding with the engagement. Under either approach, the conflict of interest in Canal Corp was magnified by modifications to the indemnity agreement sought by the taxpayer, modifications which probably should have caused PWC to rethink its commitment to provide a “should” opinion. In this respect, the case illustrates how important it is for a tax advisor to exercise independent judgment when client suggested changes to a transaction may undermine its tax viability, even if the deal (and large fee) may fall through. If further reason for caution is needed, the conflict of interest may also indicate to a trier of fact in a malpractice action against the tax advisor a possible motive for the advisor to have provided advice that breached the duty of care to the taxpayer, making it easier for the trier of fact to find such a breach. The bottom line may well be that the taxpayer\u27s loss of the reasonable cause, good faith defense may be the foundation for a malpractice action and/or a disciplinary proceeding against the tax professional
