David Brunori is contributing editor of State Tax Notes. He also writes the column The Politics of State Taxation.
Only 80 of the 199 law schools accredited by the American Bar Association regularly offer a state and local tax law course. The profession and academia should both be ashamed. That is the same number of schools that offered the course in 2008, the last time we conducted a survey of U.S. law schools. The other 119 schools still deprive their students of the opportunity to learn a fundamentally important subject.
In 1997 a mere 20 of the then 180 accredited law schools offered a state and local tax course (see State Tax Notes, May 5, 1997, p. 1405, Doc 97-12197, or 97 STN 87-44). Things improved dramatically by 2000, when 48 of the 183 law schools offered the course (see State Tax Notes, Aug. 14, 2000, p. 425, Doc 2000-21210, or 2000 STT 157-36). Things improved again by 2008, when 80 of the 195 law schools taught state and local tax. But the momentum has stalled (see State Tax Notes, June 2, 2008, p. 729, Doc 2008-11700, or 2008 STT 107-8). While the nation has added four more law schools, the number teaching state and local tax has remained the same. Although the 80 schools offering the course deserve commendation, what of the other 119? They deserve the scorn of the profession.
As in earlier years, most of the very best law schools fail to offer a course in state and local taxation. Of the U.S. News & World Report top 25 law schools, the University of California, Davis; Stanford University; the University of California, Berkeley; the University of Southern California; the University of Chicago; Indiana University; the University of Notre Dame; Harvard University; the University of Michigan; Columbia University; Cornell University; Duke University; the University of Pennsylvania; Vanderbilt University; and the University of Texas could not be bothered to offer a course. Apparently, these 15 schools don't think the subject is important enough. Vanderbilt's failure to offer a course is ironic because one of the giants in the field, Paul Hartman, taught there for decades. The same can be said for Harvard, where Oliver Oldman taught legions of students state and local tax.
If it were up to me, teaching state and local tax law would be a prerequisite for being named to the top 25 law schools. Of the schools in the current U.S. News & World Report rankings, only the University of California, Los Angeles; George Washington University; Georgetown University; the University of Illinois; Northwestern University; Boston University; the University of Minnesota; Washington University; New York University; and the University of Virginia qualify. NYU is the highest-ranked school offering a course in state and local tax.
Now, I realize no one will turn down acceptance at Harvard or Yale because those universities do not offer a course in state and local tax. They should, but they won't. But what if you really want to be a tax lawyer? U.S. News & World Report also ranks the top 10 tax programs. Incredibly, four of the top 10 schools (Texas, Stanford, Columbia, and Harvard) don't bother to teach state and local tax law. So how does a school reach the pinnacle of tax academia when it neglects a field that accounts for more than $1.3 trillion in tax revenue?
The one bright spot is that 25 of the 26 law schools offering an LLM in tax actually teach state and local tax regularly. The only school offering an LLM in tax that does not teach state and local tax is DePaul University, which is sad because it is otherwise a very good law school. DePaul does find the time to offer a course on taxation of financial transactions in the Cayman Islands. It could be that hiding money from the IRS in the Cayman Islands is more lucrative than creating a holding company in Delaware.
Why It's Important
I realize I'm preaching to the choir, but state and local taxation is more important today than at any other time in American history. Corporations now pay more in total state and local taxes than they do in federal taxes. The increased costs of doing business resulting from state taxes have prompted corporations to pay closer attention to state tax planning. And there has been a rapid increase in the number of corporations engaging in multistate business. Doing business across state lines raises a multitude of issues that require thoughtful legal planning.
And lest we forget, state and local governments are in dire need of money. The Great Recession has wreaked havoc on subnational budgets. But even before the recession, state and local government budgets were suffering from the costs of added responsibilities. State and local governments have taken on a much greater role in transportation, public safety, and healthcare. And the property tax revolts have shifted much of the cost of K-12 education to the states.
As a result, state tax agencies have become more aggressive in audits and collections. State tax controversies and litigation have increased dramatically. The complexity of conducting business across state lines and increased state aggressiveness raise the stakes for corporations -- and increase their need for quality legal counsel.
As I noted in 1997, 2000, and 2008, the heightened interest in state taxation is reflected in the quality of the professionals. Those who lead the Big Four state and local tax practices aren't people who chose state tax practice because they couldn't make it on the federal side. The partners and associates who work in state and local tax at national law firms -- Morrison & Foerster; Sutherland, Asbill & Brennan; Reed Smith; and McDermott Will & Emery -- are among the nation's best lawyers. And the increased demand for quality people isn't limited to the private sector. State and local revenue departments have added more and better staff in recent years. Indeed, the senior revenue officials have never been better educated or more experienced than they are today.
There are and will continue to be legal jobs in the state and local tax area. So there is a practical reason for offering a course. Law schools routinely offer courses on law and literature. What exactly is the demand for young lawyers well versed in law and Shakespeare? Courses in law and the movies are offered. But no law school has ever produced a lawyer as talented, ethical, or hard-drinking as Paul Newman's Frank Galvin in The Verdict. Harvard (and probably other schools) offers a course in Talmudic law. Does Harvard think its students will be practicing in 11th-century BC Babylon?
Besides the practical reasons for offering a course in state and local tax, schools should teach the subject for the good of society. There is an ongoing debate over how state and local governments should raise revenue. There is a right way and a wrong way to impose taxes. Everyone from the Center on Budget and Policy Priorities to the Tax Foundation to the Council On State Taxation agrees: There are principles of sound tax policy. And those principles are unique in the state and local tax world.
But bad tax policy -- say, sales taxation of business inputs -- has prevailed for decades. We don't tax consumption or income or property in an efficient or fair manner. Much of the blame lies with political leaders who know little, and care less, about sound tax policy. But some of the blame lies with the legal profession. Many lawyers entering the state and local tax field don't understand what constitutes good tax policy. Many don't understand the implications of changing an apportionment formula or exempting a particular product from sales tax. I'm not saying that teaching state and local tax will cure all our tax policy problems. But it could arm a generation of tax lawyers with some knowledge that might produce benefits in the future.
There is another reason for adding state and local taxation to the curriculum. It is a fascinating subject to study. It involves thinking about the convergence of such diverse subjects as substantive tax, constitutional law, and business planning.
Although many of its concepts are similar to those on the federal side, state taxation offers unique areas to explore in both practical and theoretical contexts. The intricacies of formulary apportionment, business versus nonbusiness income, and sales taxation of inputs are just some of the topics that will challenge the student. The substantive tax rules directly influence important business planning decisions. They are the subject of intense debate, and lobbying, in state legislatures.
Constitutional limitations on state tax authority are, of course, an important part of the study of state taxation. And that aspect of the field is a rich area to study. It involves more than knowing the definition of substantial nexus. It requires an understanding of how and why states compete. It requires thinking about how businesses take advantage of the limitations on state taxing authority. It requires thinking about Congress's role in regulating the economy and the relationship of that role to the basic concepts of federalism.
More importantly, the study of state taxation involves an interdisciplinary approach that encompasses business, politics, and economics. One cannot know state taxation without a fundamental understanding of business operation, the revenue needs of government, and the political influences on tax policy. The effects of state taxation on real-world events constitute an important, and provocative, aspect of study in the field.
In short, state and local tax law can provide law students with immense intellectual challenges. Regardless of whether they ever practice in the field, their legal education will be enhanced by the effort.
What You Should Do
Some of the 119 law schools don't teach state and local tax courses because they don't understand its importance. Some of them fail to offer the course because they cannot identify adjunct faculty to teach.
There is a law school near you. There are 12 law schools in California (a state badly in need of better tax law). There are six in Florida, six in Texas, six in Ohio, and nine in New York. Call the dean of academic affairs or a faculty member at a local law school and find out if you can teach state and local tax. The administration and faculty at most law schools would be thrilled to hear from experienced practitioners who want to share their knowledge with the students. If the school is interested, you might be asked to prepare a syllabus. If you want help in doing that, e-mail me at email@example.com; I will provide you with a copy of a syllabus and information on textbooks and other resources.
We need to encourage law schools to make state and local taxation a part of the tax curriculum and to offer it regularly. Offer to teach it yourself, or encourage a colleague to do so. Teaching state and local tax at George Washington University Law School has been among the most rewarding experiences of my career. That reward can be yours, too.
Final Note: Which School Is Best for
State and Local Tax?
As in previous years, I examined the quality of the state and local tax offerings. Most schools had well-known and respected full-time faculty or practitioners teaching. Most professors, from what I could discern, used well-regarded texts and teaching resources.
The leader in the state and local tax field among academic institutions is unquestionably NYU, which lists three different state and local courses -- almost every other school with a course offers only one. And at least two of those NYU courses are taught by Richard Pomp. Pomp and the University of Georgia's Wally Hellerstein are legendary scholars and they have dominated the field of state and local taxation for more than two decades.
The only school that comes close is the Georgetown University Law Center. Georgetown offers two different courses in state and local taxation; although the courses are primarily designed for LLM students, they are generally open to juris doctor students as well. Georgetown has a close working relationship with the Council On State Taxation and uses some excellent practitioners (Donald Griswold, Walter Nagel, and Jeff Friedman) to teach.
Most people who teach state and local tax realize the difficulty of jamming so much information on a wide variety of topics into a one-semester course. I have always thought law schools could offer separate courses on constitutional limitations (for example, the commerce and due process clauses), corporate and franchise taxation, and consumption taxes. Yet in our survey, State Tax Notes could not find any schools other than NYU and Georgetown that offered two different courses.
ABA-Approved Law Schools That Offer a
State and Local Taxation Course
- University of Alabama School of Law
- Samford University, Cumberland School of Law
- University of Arizona James E. Rogers College of Law
- University of Arkansas at Little Rock, William H. Bowen School of Law
- Chapman University School of Law
- Golden Gate University School of Law
- Loyola Law School, Loyola Marymount University
- University of California, Hastings College of the Law
- University of San Diego School of Law
- University of San Francisco School of Law
- University of the Pacific, McGeorge School of Law
- University of California at Los Angeles (UCLA) School of Law
- University of Colorado Law School
- University of Denver Sturm College of Law
- University of Connecticut School of Law
- Quinnipiac University School of Law
- Widener University School of Law
District of Columbia
- George Washington University Law School
- Georgetown University Law Center
- Howard University School of Law
- Florida Coastal School of Law
- University of Florida, Fredric G. Levin College of Law
- University of Miami School of Law
- Florida State University College of Law
- St. Thomas University School of Law
- Stetson University College of Law
- Emory University School of Law
- University of Georgia School of Law
- Georgia State University College of Law
- Chicago-Kent College of Law, Illinois Institute of Technology
- University of Illinois College of Law
- The John Marshall Law School
- Loyola University Chicago School of Law
- Northwestern University School of Law
- Indiana University School of Law -- Indianapolis
- Washburn University School of Law
- University of Kentucky College of Law
- University of Louisville's Brandeis School of Law
- Louisiana State University, Paul M. Hebert Law Center
- Loyola University New Orleans College of Law
- Tulane University Law School
- University of Baltimore School of Law
- Boston University School of Law
- Northeastern University School of Law
- Michigan State University College of Law
- The Thomas M. Cooley Law School
- Wayne State University Law School
- William Mitchell College of Law
- University of Minnesota Law School
- Hamline University School of Law
- University of Missouri -- Kansas City School of Law
- Saint Louis University School of Law
- Washington University School of Law
- Creighton University School of Law
- Rutgers School of Law -- Newark
- Seton Hall University School of Law
- University of New Mexico School of Law
- Hofstra University School of Law
- Albany Law School of Union University
- University at Buffalo Law School, the State University of New York (SUNY)
- Benjamin N. Cardozo School of Law, Yeshiva University
- New York Law School
- New York University School of Law
- Charlotte School of Law
- University of North Dakota School of Law
- Capital University Law School
- Cleveland State University -- Cleveland-Marshall College of Law
- University of Toledo College of Law
- Penn State University, Dickinson School of Law
- Temple University -- James E. Beasley School of Law
- Widener University School of Law
- Villanova University School of Law
- University of Houston Law Center
- SMU Dedman School of Law
- Baylor University School of Law
- George Mason University School of Law
- University of Virginia School of Law
- University of Washington School of Law
- University of Wisconsin Law School
- Marquette University Law School
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