Tax Law

Obama, BigLaw, and Taxes
(Or: Obama = $34,000 Paycut)

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Barack Obama Senator Barack Hussein Obama Above the Law blog.jpg[Ed. note: Today we bring you some "news you can use": a practical look at how political choices might affect your personal finances. This post is by Ted Frank, who blogs at Overlawyered.com and PointofLaw.com, and who has guest edited ATL in the past. Take it away, Ted.]
BigLaw lawyers love Obama. If one searches by law firm various databases on-line for campaign contributions, one sees an overwhelming sea of blue, and most of it to Obama.
But how will Obama affect BigLaw wallets? On Above the Law, we regularly see commenters threaten to abandon law firms for falling $5,000/year short of market. I therefore thought it worthwhile to examine the effects of Obama’s tax and spending plans on take-home pay.
We all know that Obama wants to end the Bush tax cuts. That is a 3% bump across the board to the bad old days when associates faced a marginal federal tax rate of 36%.
But the real hidden tax is that Obama plans to end the social-security tax cap. Right now, you may notice, sometime during the summer or early fall, your take-home pay suddenly goes up because they stop deducting FICA. Current law caps social security taxes: in 2008, the cap is at $102,000. Obama proposes to abolish this. That mid-summer bump will be no more: add about several thousand dollars to your annual tax bill.
But social-security taxes are not only on employees. The government also charges 6.2% to employers that you never see on your W-2s. But rest assured the partners see this, and will notice that the expense of keeping an associate has risen several thousand dollars a year when FICA taxes double and triple. Will they swallow that additional expense, or take it out of your bonus?
Find out, after the jump (or click here).

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(Or: Obama = $34,000 Paycut)”

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Non-Sequiturs: 02.07.08

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* The NYT’s official statement on L’Affaire Berenson. [Starkman & Associates]
* A slew of law school hypotheticals about sex with and between minors, triggered by Carl Stanley McGee, our Lawyer of the Day. [PrawfsBlawg]
* Second runner-up for Lawyer of the Day? And a punitive damages award of $33 million. Ouch. [How Appealing]
* Man saves dog; law student saves man. Congratulations to GW’s Jason Coates, our Law Student of the Day! [GW Hatchet]
* “Derek Jeter has romanced Mariah Carey, squired Jessica Biel, sweet-talked Scarlett Johansson — and now he’s made it to first base with the state taxman.” [TaxProf Blog]
* Wow, this is wild. Has Gary Crossen, a former federal prosecutor and partner at Foley Hoag, read too many John Grisham novels? [WSJ Law Blog]
* Speaking of white-collar criminal defense lawyers, more business may be headed their way, courtesy of Andrew Cuomo. [DealBreaker]
* You’ve got… male? [Reuters]
* Are you a Disgruntled Republican? Join the club — or buy a mug. [Zazzle]

7 Comments

Morning Docket: 01.30.08

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* “T.Owes.” [ESPN]
* Rebates to $500? [CNN]
* AG Mukasey won’t label waterboarding. [MSNBC]
* Sen. McCain wins Florida, Rudy to bow out. [New York Times; Washington Post]
* Federal inquiry into stolen artifacts expands. [New York Times]
* Margaret Truman, only child of President Truman and author of mysteries set at the Supreme Court and the FBI, RIP. [AP]

5 Comments

Morning Docket: 01.28.08

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* Top candidates turn to trial lawyers for support. [Washington Post]
* More recusal requests expected in WV Supreme Court. [WSJ Law Blog]
* Former NFL player’s wife files malpractice suit over surgery. [ESPN]
* Suffrage suffers in Mexico. [MSNBC]
* How to count primary delegates (and an explanation of the “superdelegates”). [New York Times; New York Times]
* “It’s just not realistic” to present major new initiatives, but the SOTU will still be on every channel tonight. White House speechwriters are not on strike. [CNN]
* Super-litigator Tom Barr of Cravath, RIP. [New York Times (death notice); WSJ Law Blog]

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Job of the Week

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If you’re not already a member of Lateral Link, you can sign up through their website. Membership, which is free and confidential, allows you to learn about new legal opportunities as they become available. Successfully placed candidates will receive a $10,000 placement bonus.
Position Type / Location: Law Firm – Tax Associate (Washington, DC)
Position Description: The Washington D.C. office is seeking a mid-level tax associate to work on project finance transactions. This magic circle law firm makes The American Lawyer’s AmLaw 100 rankings. The firm’s practice areas include corporate, bankruptcy and restructuring, intellectual property, litigation, project finance, reinsurance and insurance, and tax. The successful candidate must have at least 3-6 years experience in partnerships, foreign tax planning, leveraged leasing, subchapter C and tax-exempt financing.
For more information, see job #7697 on Lateral Link.
Earlier: Prior Job of the Week listings (scroll down)

Non-Sequiturs: 01.17.08

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Green Bay Packers football Above the Law blog.jpg* Does the Supreme Court’s Stoneridge decision give the “getaway drivers” of securities fraud a free pass? [OverHedged]
* Apparently Green Bay fans really like the Packers. [SI.com]
* Miss Loyola 2L? Meet Kirsten Wolf. [WSJ Law Blog]
* Did Barack Obama receive an illegal endorsement? [TaxProf Blog]
* Speaking of Obama, his minister had this to say about Bill Clinton: “He did the same thing to us that he did to Monica Lewinsky.” Can someone please remove the cigar from the national vajayjay? [Baltimore Sun]

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Non-Sequiturs: 01.10.08

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Hillary The Movie Above the Law blog.jpg* Actually, Judge Lamberth, calling a presidential candidate as “a European socialist” constitutes an endorsement — at least at most American law schools. [AP via WSJ Law Blog]

* News you can use: under the “Free File” program, opening tomorrow, the IRS and its private-sector partners will provide free tax preparation and electronic filing services to qualifying taxpayers (AGI of $54,000 or less — sorry, Biglaw denizens). [TaxProf Blog]

* The law school essay question: an unrecognized art form? [PrawfsBlawg]

* Practice pointer: don’t “recreate” correspondence to use as evidence in your case. Dramatic reenactments belong on television, not in court. [Feminist Law Professors]

* We just got called “the Matt Drudge of the legal world.” Our thanks to Neil Squillante for making our day. Now where did we put our animated siren GIF? [TechnoLawyer]

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Cleary Gottlieb Associate Gets Benchslapped By Tax Court

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Shawn Hynes Shawn T Hynes Cleary Gottlieb Above the Law blog.jpgAs the old adage goes, “A lawyer who represents himself has a fool for a client.” And there is some anecdotal evidence in support of that proposition. See, e.g., Elana Glatt / Elana Elbogen (depending upon how you view the merits of her case against her wedding florist).
Here’s another example of what can happen when Biglaw litigators represent themselves. From TaxProf Blog:

The Tax Court today decided Hynes v. Commissioner, T.C. Summ. Op. 2008-1 (1/2/08), a case involving Shawn T. Hynes, a fifth year securities litigation associate in Cleary Gottlieb’s New York City office. The taxable year at issue was 2003, when Hynes was a Penn 3L (he tranferred to Penn after completing his first year at Oregon).

More about the facts of Shawn Hynes’s case, and how he got benchslapped by the Tax Court, after the jump.

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Job of the Week

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Here’s the latest Job of the Week, courtesy of ATL’s career partner, Lateral Link. Check out their new, redesigned website by clicking here.
(Since we didn’t post a Job of the Week last week, due to the abbreviated holiday publication schedule, we’ll give you two this week — one today, and one near the end of the week.)
Position: Transactional tax associate at international consulting firm
Location: New York
Description: International management consulting firm seeks associate to join its Transaction Tax Services group.
More details, after the jump.

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Morning Docket: 11.08.07

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* Pakistan sets parliamentary elections. [CNN]
* What’s going on with the AMT? [ABA Journal]
* State Department absolves Blackwater of certain shootings. [MSNBC]
* Initial OJ hearing begins today. [MSNBC]
* Reno businessman pleads guilty during murder trial. [CourtTV]

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