Did you watch Republican vice-presidential nominee Sarah Palin’s speech last night? Of course you did; it was a must-see. And regardless of your politics, you can’t deny that she delivered it superbly, with polish and poise. In short, at least as a stylistic matter, it was the Best Speech Ever.
But how was the Palin speech as a matter of substance? The AP fact-checked it and identified some issues:
PALIN: “The Democratic nominee for president supports plans to raise income taxes, raise payroll taxes, raise investment income taxes, raise the death tax, raise business taxes, and increase the tax burden on the American people by hundreds of billions of dollars.”
THE FACTS: The Tax Policy Center, a think tank run jointly by the Brookings Institution and the Urban Institute, concluded that Obama’s plan would increase after-tax income for middle-income taxpayers by about 5 percent by 2012, or nearly $2,200 annually. McCain’s plan, which cuts taxes across all income levels, would raise after tax-income for middle-income taxpayers by 3 percent, the center concluded.
Who cares about Kansas — what about Biglaw associates (and partners)? How would they be affected by Obama’s tax plan? With their six- and seven-figure salaries, some are doing a lot better than “middle income.”
Check out some surprising numbers, after the jump.
[Ed. note: Ted Frank's posts analyzing presidential candidate Barack Obama's tax plan, available here and here, were some of the most popular in ATL history. They generated over 900 comments and thousands of pageviews. Because there have been some developments on this front since February, when Ted Frank first issued his analysis, we requested an update; he kindly obliged.]
Above the Law’s Fearless Leader David Lat asked me to update my earlier posts on Obama’s tax plan. As you recall, Obama made a series of promises of “fixing” the tax code, mostly on the backs of investors and the upper middle-class — like Biglaw associates.
I ran a spreadsheet that showed that, with reasonable assumptions, those tax increases would have the same effect on associate after-tax income as a New York law firm cutting salaries by $34,000, but permitted one to change the assumptions if you disagreed with the assumptions I made. I made no endorsements, noting that, Thomas “no relation” Frank notwithstanding, taxes and economic issues were not the only reason to vote for a presidential candidate. (Still, commenters’ reactions can best be described by Tyler Cowen’s description of “Obama insecurity“: “For some people no comment on Obama, other than the purely laudatory, is anything other than a hackish right-wing attempt to forge an alliance of lies with Karl Rove and his ilk.”)
Since then, Obama’s two top economic advisors have posted a Wall Street Journal editorial and a website giving somewhat more detail to the Obama tax plan. David asked me to update my post.
1. The most notable change is Obama’s social security tax plan. Recall that his original promise was to simply lift the cap, changing the system from a pay-in to income-redistribution — something that would have cost law firm associates thousands or tens of thousands and raised marginal tax rates to nearly 60%. When Hillary Clinton started hitting him hard about it, he backed off his original plan to make social security taxes uniform and said he might (but might not) add a “doughnut-hole” between $97,000 and $150,000 or $200,000 or $250,000.
Now that Obama has clinched the nomination and is pretending to be a centrist for the general election, after the Wall Street Journal hit him hard about it, Obama pushed everything he promised in the primaries overboard. First, he said he would raise taxes not the full 12.4%, but just “2 to 4%” — so much for making Warren Buffett pay the same rate as his secretary. The latest is that Obama will avoid any tax changes in social security until 2019, i.e., punting the problem into President Jindal’s lap. So zero out the social security tax increases, unless Obama changes his mind for a fourth time. (People at my high school backed off of plans for trillion-dollar tax increases when faced with outrage from Above the Law commenters all the time. It was no big deal.)
Read more, after the jump.
* Why does Wall Street get all the juicy scandals? We’re jealous of our DealBreaker colleagues. [Dealbreaker]
* Larry Ribstein’s take: “it’s hard not to think that it’s really all about dispute a few weeks ago between [the NYT's Andrew Ross] Sorkin and Dealbreaker’s John Carney.” [Ideoblog]
* Are you in the top one percent of U.S. taxpayers ranked by adjusted gross income? And which states are home to the richest of rich taxpayers? [TaxProf Blog]
* “Would you trust a law professor to be President?” [Althouse]
* Speaking of law profs, they may boycott the annual AALS meeting, due to the hotel owner’s opposition to same-sex marriage. [National Law Journal via TaxProf Blog]
* An interesting interview of Fried Frank partner Jonathan Mechanic, a superstar of the real estate bar. [New York Observer]
* Russian judge: “If we had no sexual harassment we would have no children.” [Telegraph (U.K.)]
Debevoise & Plimpton has long been among New York’s most prestigious law firms. It’s also widely viewed as an excellent place to work.
In the past, Debevoise’s prestige has arguably outpaced its profits. It’s often ranked more highly on the Vault 100 than on the Am Law 100 (when ranked by profits per partner). In the most recent rankings, Debevoise was #13 on the Vault 100 and #20 on the Am Law 100 by PPP.
Perhaps that’s about to change. From Legal Week (via Law.com):
Debevoise & Plimpton has unveiled stellar financial results for 2007, with the New York law firm seeing both partner profits and fees climb by more than 20 percent over the last 12 months.
Profits per equity partner (PEP) at Debevoise rose by 26.5 percent from $1.81 million last year to a new high of $2.29 million. Global revenue, meanwhile, was up by 23.4 percent from $575 million in 2006 to $709.54 million.
A source who passed along this news added: “Although not mentioned in the article, several large investigations are the driving force behind these numbers.”
Of course, that’s not surprising. Thanks in large part to former U.S. Attorney Mary Jo White, internal investigations have long been a mainstay of Debevoise’s practice. They’re long-running and lucrative, since no company in deep doo-doo wants to look like it’s skimping on self-scrutiny. See, e.g., Siemens (aka Debevoise cash cow).
But how much cash will they get to keep? Discussion of a new tax proposal that will disproportionately affect partners at large law firms, after the jump.
* Linda Greenhouse to $300K! [New York Observer via ABA Journal]
* Duties of a law school dean: attend parties, appear at conferences, talk to alums. And don’t forget the herding of cats — aka law professors. [TJ's Double Play]
* Even law review editors screw up sometimes. “Constructive acceptance”? [Concurring Opinions]
* Who’d have thunk it? Sometimes blogging can help people. And stuff. [Legal Blog Watch]
* Ethan Leib dresses up as a giant chicken to teach Contracts, thereby guaranteeing ABA accreditation. [PrawfsBlawg]
* Orin Kerr points out online interviews “with eight of the nine current Supreme Court Justices (all but Souter) about legal writing, advocacy, and the process of deciding cases and writing opinions.” [Volokh Conspiracy]
* Ann Althouse on John McCain and being a “natural-born citizen.” [Althouse]
* Hillary to Russert: You can’t handle the truth! About my tax returns. [TaxProf Blog]
[Ed. note: Yesterday's guest post about how Barack Obama's tax plan might affect Biglaw associates, authored by Ted Frank, generated a record number of comments on ATL: 564 (and counting). It also generated lots of reaction throughout the blogosphere (links collected below). So we thought we'd invite Ted to do a follow-up.]
Here it is. Ted wrote it in response to the following reader email, which makes many of the arguments that surfaced in the 564+ comments. From an Obama defender:
I’m sorry, but you are losing your credibility by posting this false propaganda on Obama. Look at Obama’s website. It clearly states, “Asked About Raising the Cap, Obama said, ‘You Might Have the Equivalent of a Doughnut Hole’–NOT That He Would Completely Remove the Cap.” Obama “has stated in various venues that ‘his inclination… has been for a ‘donut’ where the uncapping would take place above some threshold income level — probably around $200,000 or $250,000′ his economic adviser Austan Goolsbee said in an email. A donut would protect a certain portion of income (e.g., between $100,000 and $200,000) from the payroll tax and could be phased in over decades.”
In addition, that “$34,000 paycut” in the post title is misleading. Even if all your assumptions were correct (which they weren’t), the after tax pay cut under Obama is < $20,000. I love your site, but please correct this ridiculous false article before you lose all credibility.
And now, without further ado, Ted Frank.
* * * * * * * * * *
First, as I show in the spreadsheet, a $20,000 tax increase is the equivalent of a $34,000 before-tax paycut for a New York City resident, which would have the same after-tax effect. The $34,000 figure is accurate: that’s just math. The Obama tax plan would have the same effect on a NYC fifth-year associate being paid market as a $34,000 paycut.
Obama has never said he will have a doughnut-hole, only that his SS tax could include a doughnut-hole. When Hillary Clinton attacked Obama at the November 15 Nevada debate for wanting to eliminate the cap, Obama didn’t say that the attack was incorrect; he defended the policy because eliminating the cap would only affect what he called the “upper class.” The press has accurately reported that Obama has also proposed eliminating the cap; even Obama’s own website links to a thinktank’s analysis of the benefits of a cap elimination.
It would be really easy for Obama to promise to include a “doughnut-hole” or to not eliminate the SS-tax cap. He certainly hasn’t been afraid to promise drastically expensive programs of new spending or even tax giveaways to large swaths of the population who aren’t paying much tax now.
But when it comes to Social Security, Obama is suddenly vague; when he does discuss details, it is to cite examples (e.g., Warren Buffett) that could not be accomplished without eliminating the cap entirely. And the only reason a politician acts that way is because he supports the more drastic, politically unpopular plan, but doesn’t want to get tagged with it before the election, and will say after the election “I only said I would ‘consider’ a doughnut-hole.” How Barack Obama’s Tax Plan Will Affect You [Microsoft Excel file]
Additional discussion and links, after the jump.
[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).
* The NYT’s official statement on L’AffaireBerenson. [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]
* “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]
* 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]
Ed. note: The Asia Chronicles column is authored by Kinney Recruiting. Kinney has made more placements of U.S. associates, counsels and partners in Asia than any other recruiting firm in each of the past six years. You can reach them by email: [email protected].
Since late last year, things have been booming in Hong Kong / China in cap markets, especially Hong Kong IPOs. M&A deal flow has recently been getting a bit stronger as well. Although one can’t predict such things with any certainty, all signs are pointing to a banner entire 2014 for the top end US corporate and cap markets practices in Hong Kong / China. This is not really new news, as its been the feeling most in the market have had for a few months now and things continue to look good.
The head of our Asia practice, Evan Jowers, has been in Hong Kong for about 10 days a month (with trips every other month to both Shanghai and Bejing) for the past 7 months (Robert Kinney and Evan Jowers will be in Hong Kong again March 15 to 23), and spending most of his time there meeting with senior US hiring partners at just about all the major US and UK firms there, as well as prospective candidates at all associate levels and partner levels, and when in the US, Evan works Asia hours and is regularly on the phone with such persons, as our the other members of our Asia team. Our Yuliya Vinokurova is in Hong Kong every other month and Robert is there about 5 times a year as well. While we have a solid Asia team of recruiters, Evan Jowers will spend at least some time with all of our candidates for Asia position. We have had long standing relationships, and good friendships in some cases, with hiring partners and other senior US partners in Asia for 8 years now.
Are you challenged by the costs and logistics of maintaining your office, distracting you from the practice of law?
Many small firms are successfully moving part—or even all—of their practice to a virtual setting. This even includes multi-jurisdictional practice spanning several states and practice areas, although solo and small partnerships are still the largest adopters of virtual law.
Can you do the same? The new article Mobile in Practice, Virtual by Design from author Jared Correia, Esq., explores how mobile technology bring real-life benefits to a small law firm. Read this new article—the next in Thomson Reuters’ Independent Thinking series for small firms—to explore how a mobile practice:
Everyone is talking about the importance of Social Media in Corporate America. But it is relatively safe to say that most law firms and lawyers are slightly behind the social curve. Most lawyers, at minimum, use LinkedIn, for networking. Some even use Twitter for pushing out short, pithy content, while many have Blogs, where they write their little hearts out. The adage “it is better to give than to receive” is not always true though in the world of Social. In the Social World – it is best to listen, give back and engage.
Social Media is a communications tool that can deeply educate you about the needs and wants of your clients and prospects when used in conjunction social media monitoring and sharing tools.
Take this quick quiz and see if you know how to use Social to help you engage more with your clients or to better service the ones you have.