Saturday, November 11, 2017
(Dis)Empowering (retail) shareholders?
SEC Commissioner Jay Clayton recently gave a speech where he remarked:
I have become increasingly concerned that the voices of long-term retail investors may be underrepresented or selectively represented in corporate governance. For instance, the SEC staff estimates that over 66% of the Russell 1000 companies are owned by Main Street investors, either directly or indirectly through mutual funds, pension or other employer-sponsored funds, or accounts with investment advisers… And, if foreign ownership is excluded, that percentage approaches approximately 79%.
… A question I have is: are voting decisions maximizing the funds’ value for those shareholders?
In situations where the voting power is held by or passed through to Main Street investors, it is noteworthy that non-participation rates in the proxy process are high. … This may be a signal that our proxy process is too cumbersome for retail investors and needs updating.
What’s interesting is that there are two different ideas here. One concerns the voting power of mutual funds and pension funds; the other concerns the votes of retail shareholders themselves.
As for retail votes, Jill Fisch has an article on this very subject forthcoming in the Minnesota Law Review. She recommends that retail shareholders be given access to electronic platforms, similar to those available to institutions, that allow them to set advance voting instructions without requiring them to make a company by company decision.
The broader question, though, is whether we do in fact want to encourage greater retail participation, and what the effects are likely to be. There’s long been an argument that retail investors should not invest directly, and the rules governing securities markets have, to a greater and greater extent, become less hospitable to them. (Stephen Choi, for example, has argued that investors should only be allowed to participate in capital markets if they demonstrate a certain degree of sophistication.) If that’s right, it makes little sense to encourage their participation in corporate governance.
At the same time, though, public companies love retail investors, because they are less likely to coordinate with pesky activists, and are assumed to be more supportive of management. I’ve often wondered if that was the motivating force behind Loyal3 (which recently folded shop), providing a free online brokerage for retail investors that wanted stock in their favorite brands.
Given what appears to be the general Republican preference, I rather suspect that they believe shareholder involvement in corporate governance is a net negative, and I wonder if Clayton’s newfound push for retail investor involvement is actually a stealth attempt to provide management with a bulwark against activist challenges.
Certainly, that appears to be the theme of Clayton’s actions: the rest of his speech expresses concern about shareholder proposals, and a recent SEC staff opinion suggests a shift to more deference to corporate boards when deciding excludability. In that context, his conflation of retail investor voting with mutual fund voting seems like something of a shot across the bow targeting mutual fund voting power. I can imagine, for example, a push to transition to pass-through voting for mutual funds, combined with a few measures that encourage retail investor participation.
But if that’s the kind of thing Clayton is hinting at – and to be sure, no one has suggested it so far, but it would make sense as an endgame – I do wonder how much it (and other efforts to involve retail shareholders) will backfire. I imagine retail investors, if seriously encouraged to participate, might be more – not less – likely to vote for social proposals and other less-than-wealth-maximizing actions that, these days, mutual funds tend to avoid unless pressed. And as Jill Fisch points out, retail investors might adopt advance voting instructions that set automatic triggers to challenge management when certain underperformance benchmarks are met. If the default assumption is that retail investors are less informed and less attentive, encouraging their greater participation may be something of a double-edged sword, from management’s perspective.
Moreover, if we have greater retail involvement in the voting process, Delaware might have to revisit decisions like Corwin v. KKR, 125 A.3d 304 (2015), which rest - at least implicitly - on the assumption of a sophisticated (institutional) shareholder base. And that’s something I'm pretty sure management would not want.
November 11, 2017 in Ann Lipton | Permalink | Comments (0)
Friday, November 10, 2017
Deadlines and Extensions
After my daughter Allie's first stay at Vanderbilt Children’s hospital, with what we think was a virus that attacked her lungs, Allie seemed to return to normal for a couple weeks before having another episode. This time, we spent 4 days in the hospital. The praise I lavished on Vanderbilt last time was less deserved on this trip, mostly blamed, staff repeatedly claimed, on a new computer system. (Note: In a place like a hospital, don’t you think you should provide adequate training and work out the bugs before launching a new computer system?)
In any event, Allie is back home again, though we are still working with doctors to uncover the precise cause.
Obviously, my daughter’s health is much more important than work, but I do need to continue to work (if for no other reason than health insurance...we would be bankrupt without health insurance). Given that my focus has been diverted, I have had to push on quite a number of deadlines -- 4 writing assignments and 2 speaking engagements -- and have been slower than normal in returning graded work. Thankfully, students, editors, and colleagues have been quite understanding.
As a professor and a person, I am a big believer in meeting deadlines, so it has been difficult for me to ask for extensions. When asking for extensions, I do think students and professors can “cry wolf” too often, and then, when true emergencies do arise, it becomes harder for the other side to happily grant the extension. This situation has made me even more committed to hitting every deadline I can, so that when I do ask for an emergency extension, people know it is for a valid reason.
Also, this situation has reminded me of the need to create some margin in my life. This past month was going to be a busy one, even without my daughter’s situation. It was doable, but all time needed to be available and efficiently used. Without margin, many projects were impacted, in domino fashion. Now, this situation with my daughter was unexpected and extraordinary and difficult to plan for, and I am not suggesting that we all run at 50% capacity in case of an emergency, but I do think I could have benefited from having built a bit more flexibility into my schedule. (Note: As a law review adviser, I recommended that my students to build some of this margin into their publishing schedule for professors. For example, tell the professors you need the article about a month before you actually do because various issues almost invariably arise.)
In any event, I am quite appreciative to all those who have been so understanding, and I am catching up. Barring any future issues, I think I will be back in the grove and on schedule in about 10 days or so, just in time to gear up for finals.
November 10, 2017 in Business Associations, Business School, Haskell Murray, Law Reviews, Teaching | Permalink | Comments (1)
Thursday, November 9, 2017
ICYMI: #corpgov Midweek Roundup (Nov. 9, 2017)
So the source/purpose of speech matters? "harnessing digital platforms to..shape..information..in..the US" https://t.co/o7xpR52cOF #corpgov
— Stefan Padfield (@ProfPadfield) November 6, 2017
"An Antitrust Approach to Corporate Free Exercise Claims" https://t.co/s2Cy0KOxRQ #corpgov
— Stefan Padfield (@ProfPadfield) November 6, 2017
"for many multi-member LLCs—perhaps even for most—the best method is litigation, not arbitration" https://t.co/YJpvAUUs29 #corpgov
— Stefan Padfield (@ProfPadfield) November 7, 2017
Hey @Twitter, can you at least provide badges for those of us who can still manage to get to the point in 140 characters?
— Stefan Padfield (@ProfPadfield) November 9, 2017
What did Adam Smith think is "by far the most important of all of commerce's effects"? The answer might surprise you. https://t.co/z9QMK5Muqu #corpgov
— Stefan Padfield (@ProfPadfield) November 9, 2017
Would AT&T "win a fight with the government over Time Warner deal"? https://t.co/4DHWrt3svJ #corpgov
— Stefan Padfield (@ProfPadfield) November 9, 2017
November 9, 2017 in Stefan J. Padfield | Permalink | Comments (0)
Wednesday, November 8, 2017
The Hypocritical American Policy toward Cuba and What it Means for U.S. Business-Part II
Last week, I posted about the Trump Administration's hypocritical policy toward Cuba and how the U.S. embargo hurts American businesses (not to mention the Cuban people). The embargo, among other things, focuses on preventing human rights violators in Cuba from profiting from Americans. Wednesday, the Administration significantly rolled back some of the Obama-era changes making it much harder for Americans to travel and making it certain that even fewer U.S. airlines will try to make their fledgling Cuba itineraries work.
Ironically, the Administration released the new regulations while the President is in China and within days of his meeting with the President of Russia in Communist Vietnam. Both China and Russia have a significant number of state-owned enterprises and very few restrictions on U.S. firms conducting business with them. The new policy, which goes into effect Thursday, once again requires people under U.S. jurisdiction to travel under the OFAC license of U.S. tour groups. As anyone who has traveled to Cuba before the Obama liberalization knows, this significantly increases the cost of the trip. The Trump Administration may not realize that those U.S. tour companies have no choice but to work with the Cuban government, which controls the tourism industry, so I'm not sure how this achieves the objectives of keeping American money out of the pockets of the government. The new rules also ban dozens of hotels, but not Starwood, which is run by the Cuban government. Although the policies aim to support the Cuban people directly, this will be difficult if Americans find it too onerous to get to the island.
If you don't have time to read the new regulations, I have cut and pasted some of Embassy's key points below:
Financial Transactions
- In accordance with the NSPM, the State Department is publishing a list of entities and subentities that are under the control of, or act for or on behalf of, the Cuban military, intelligence, or security services or personnel and with which direct financial transactions would disproportionately benefit the Cuban military, intelligence, or security services or personnel at the expense of the Cuban people or private enterprise in Cuba – the State Department’s List of Restricted Entities and Subentities Associated with Cuba (“Cuba Restricted List”). The Cuba Restricted List is maintained by the State Department and will be published and periodically updated as necessary in the Federal Register.
- Persons subject to U.S. jurisdiction will now be prohibited from engaging in certain direct financial transactions with entities and subentities identified by the State Department on the Cuba Restricted List. Certain transactions will be excluded from this prohibition pursuant to exceptions detailed in the NSPM.
- Consistent with the Administration’s interest in avoiding negative impacts on American business and travelers, commercial engagements in place prior to the State Department’s listing of any entity or subentity will continue to be authorized, as will most previously arranged travel. For example, businesses will be permitted to continue transactions outlined in contingent or other types of contractual arrangements agreed to prior to the issuance of the new regulations, consistent with other regulatory authorizations.
Trade and Commerce
- In accordance with the NSPM, BIS is establishing a general policy of denial for license applications to export items for use by entities and subentities on the Cuba Restricted List unless the transaction is otherwise consistent with the NSPM.
- Consistent with the Administration’s policy to support free enterprise in Cuba, BIS is simplifying and expanding its license exception that authorizes certain license-free exports to the Cuban private sector.
People-to-People Travel
- In accordance with the NSPM, OFAC is requiring that (1) all people-to-people nonacademic educational travel be conducted under the auspices of an organization that is subject to U.S. jurisdiction and that sponsors such exchanges to promote people-to-people contact, and (2) such travelers be accompanied by a person subject to U.S. jurisdiction who is a representative of the sponsoring organization. Individual people-to-people nonacademic educational travel will no longer be authorized as announced by the President.
- Consistent with the Administration’s interest in avoiding negative impacts on Americans for arranging lawful travel to Cuba, certain people-to-people travel that previously was authorized will continue to be authorized where the traveler had already completed at least one travel-related transaction (such as purchasing a flight or reserving accommodation) prior to the President’s June 16, 2017 announcement.
Educational Travel
- In accordance with the NSPM, Americans engaging in certain authorized educational travel will now be required to do so under the auspices of an organization that is a person subject to U.S. jurisdiction.
- These authorized educational travelers will now also be required to be accompanied by a person subject to U.S. jurisdiction who is a representative of the sponsoring organization, unless the traveler is the representative and obtains a certification letter from the sponsoring organization.
- Consistent with the Administration’s interest in avoiding negative impacts on Americans for arranging lawful travel to Cuba, certain educational travel that previously was authorized will continue to be authorized where the traveler has completed at least one travel-related transaction prior to the publication of the regulations on November 9.
Support for the Cuban People Travel
- In accordance with the NSPM, OFAC is requiring that each traveler under this travel category engage in a full-time schedule of activities that result in meaningful interaction with individuals in Cuba. Such activities must also enhance contact with the Cuban people, support civil society in Cuba, or promote the Cuban people’s independence from Cuban authorities. Renting a room in a private Cuban residence (casa particular), eating at privately owned Cuban restaurants (paladares), and shopping at privately owned stores run by self-employed Cubans (cuentapropistas) are examples of authorized activities; however, in order to meet the requirement of a full-time schedule, a traveler must engage in additional authorized Support for the Cuban People activities.
Prohibited Officials
- In accordance with the NSPM, OFAC is amending the definition of the term prohibited officials of the Government of Cuba to include certain additional individuals. BIS is making conforming changes to three license exceptions that include the same definition. This definitional change will affect certain otherwise-authorized transactions with the expanded group of such officials.
Given the meetings in Asia this week, we won't likely see any sanctions, trade or travel restrictions against countries with similar human rights records. We will, however, see fewer Americans traveling to Cuba, and fewer U.S. businesses having the opportunity to export their products to the people that the President is trying to help.
November 8, 2017 | Permalink | Comments (0)
Martin: Hiding in the Light: The Misuse of Disclosure to Advance a Business and Human Rights Agenda
My friend and colleague at West Virginia University, Jena Martin, has posted her new paper, Hiding in the Light: The Misuse of Disclosure to Advance a Business and Human Rights Agenda. The paper is forthcoming in the Columbia Journal of Transnational Law and can be accessed at https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3028826
It's worth a read. Here's the abstract:
In June 2017, Waitrose, a top UK supermarket, pulled its cans of corned beef off the shelves after an investigation revealed that the meat might have been produced with slave labor. At the time of the recall, Waitrose was in compliance with the UK Modern Slavery Act (MSA), a 2015 law enacted to prevent human trafficking and modern-day slavery. Under the MSA, corporations are required to file annual reports disclosing what action they had taken to eradicate slavery and human trafficking in their supply chains. The Modern Slavery Act, in turn, was a much-lauded law that is part of the growing trend of States to move the international business and human rights agenda forward. A key component of that agenda involves disseminating the UN’s Protect, Respect and Remedy Framework and implementing the UN Guiding Principles, which have been praised by States around the world as a framing mechanism for issues of corporate accountability for negative human rights impacts in a corporation’s operations and relationships with its suppliers.
The aim of this article is to analyze whether the business and human rights agenda (as embodied by the Three Pillar Framework and UN Guiding Principles) is well served with national laws that focus on disclosure. The article will focus primarily on rules being implemented in the United States at both the subnational and national level, however, it will also discuss approaches being used in European jurisdictions such as the United Kingdom and France and the overall trend towards a transparency model for human rights protection from business activities. The increased use of disclosure-based regulation (and the resulting compliance efforts by corporations) seems to come, at least in part, as a result of the efforts by States to address the duties laid out for them in the UN Guiding Principles. As such, it seems appropriate to undertake an analysis regarding whether these laws are in fact effective at implementing the Guiding Principles.
For decades now, disclosure has been held out as the ultimate curative for every corporate woe. The expansion of disclosure initiatives from mere investment-related issues to increasingly social policy issues would indicate that this trend will continue. Yet as this article demonstrates, disclosure to right now is at best a temporary stop gap measure that can lead to limited corporate change on the issue of business and human rights. At worst, disclosure is being used by corporations as a way to obtain a reputational advantage without actually making substantive changes – by simply hiding in the light.
November 8, 2017 in Corporations, Ethics, International Business, International Law, Joshua P. Fershee | Permalink | Comments (2)
Monday, November 6, 2017
Harvard Law School Program on Corporate Governance Seeks Fellows
The Harvard Law School Program on Corporate Governance and Financial Regulation is pleased to announce the availability of positions of Post-Graduate Academic Fellows in the areas of corporate governance and law and finance. Qualified candidates who are interested in working with the Program as Post-Graduate Academic Fellows may apply at any time and the start date is flexible.
Candidates should be interested in spending two to three years at Harvard Law School (longer periods may be possible). Candidates should have a J.D., LL.M., or S.J.D. from a U.S. law school, or a Ph.D. in economics, finance, or related areas by the time they commence their fellowship. Candidates still pursuing an S.J.D. or Ph.D. are eligible so long as they will have completed their program’s coursework requirements by the time they start. During the term of their appointment, Post-Graduate Academic Fellows work on research and corporate governance activities of the Program, depending on their skills, interests, and Program needs. Fellows may also work on their own research and publishing in preparation for a career in academia or policy research. Former Fellows of the Program now teach in leading law schools in the U.S. and abroad.
Interested candidates should submit a CV, transcripts, writing sample, list of references, and cover letter to the coordinator of the Program, Ms. Jordan Figueroa, at [email protected]. The cover letter should describe the candidate’s experience, reasons for seeking the position, career plans, and the kinds of projects and activities in which he or she would like to be involved at the Program. The position includes Harvard University benefits and a competitive fellowship salary.
November 6, 2017 in Jobs | Permalink | Comments (0)
2017 American Bar Association LLC Institute
I had the privilege of being invited again this year to present at the 2017 LLC Institute, an annual program produced by the LLC, Partnership and Unincorporated Entities Committee of the American Bar Association's Business Law Section. As part of a panel discussion on LLC fiduciary duties (with friend-of-the-BLPB Mohsen Manesh and others), I sang a few bars of Rocky Top (!) and talked about the fiduciary duty waiver issue that we faced in Tennessee in revamping our limited partnership law this past year. But that was far from the highlight of the program!
Luckily, friend-of-the-BLPB Tom Rutledge--a leader in (and former chair of) the LLC, Partnership and Unincorporated Entities Committee--has captured the essence of the two-day event in blog posts here and here. He notes in sum:
Over the last two days we have . . . , by means exceptional panels, considered and informed the participants on the broadest range of issues materially important to our shared area of interest and practice. That is the mission of the LLC Institute, and hopefully it has again delivered on its objective. The materials are posted and available for anyone, and in a few weeks the audio recordings will as well be posted. While we recommend them to you, if you did not attend you missed out on the opportunity to ask questions as the programs were in progress and perhaps even more importantly the opportunity to meet new and liaison with old friends. Those relationships are one of the great values of our Committee, the means by which we lean on and assist one another.
This is so true. The relationships--built through banter between and among panelists and audience members before, during, between, and after the sessions are what make this event special. Of course, the subject matter also is phenomenally interesting.
Co-blogger Josh Fershee also presented at the Institute this year. Other BLPB readers and friends who attended (some of whom also presented) included:
- Suffolk Law's Carter Bishop (who moderated and led our panel);
- Colorado's infamous consummate practitioners and thought-leaders Bill Callison (who gave an amazing luncheon talk on Thursday regarding his work in establishing a model entity law statute for use in developing countries*) and Bob Keatinge;
- Glommer and BYU Law Associate Dean Christine Hurt; and
- Baylor Law's Beth Miller (a/k/a the walking, talking guru of Texas business associations law and Queen of LLC caselaw--who, it was announced, will soon have a Committee content award named after her).
I am sure that I am missing someone . . . . Needless to say, a good time was had by all. And let me know if you'd like to be part of the program next year. I know that the folks who organize the event like to have new presenters come every year, to keep the banter going. I am happy to pass your name along.
_____
*Specifically, as noted in his firm biography: "He is the American Bar Association's delegate to the United Nations Commission on International Trade Law Working Group I (Micro, Small and Medium Enterprises), which is focusing on law reforms enabling adoption of simplified business entity structures by micro-, small- and medium-sized businesses in developing countries. He serves on the UNCITRAL Secretariat's expert group in this process."
November 6, 2017 in Conferences, Joan Heminway, LLCs | Permalink | Comments (2)
Sunday, November 5, 2017
ICYMI: #corpgov Weekend Roundup (Nov. 5, 2017)
"Interfaith Center on Corporate Responsibility announced ... new Investor Alliance for Human Rights" https://t.co/62wzkdefxo #corpgov
— Stefan Padfield (@ProfPadfield) November 3, 2017
"ABA urges SCOTUS to rule against baker who refused to make wedding cake for gay couple" https://t.co/kQGSyZ23vK #corpgov
— Stefan Padfield (@ProfPadfield) November 3, 2017
"A week ago, reporters..celebrated victory in their vote to join..union. On Thursday, they lost their jobs" https://t.co/7qM2Gkka4u #corpgov
— Stefan Padfield (@ProfPadfield) November 3, 2017
"SEC Staff Releases Pro-Issuer Guidance on Shareholder Proposals" https://t.co/Obm4mpHsgD #corpgov
— Stefan Padfield (@ProfPadfield) November 3, 2017
"Judge...to public company officers & directors: be vigilant for bad behavior in your operations, or else" https://t.co/TwBGYn3Txx #corpgov
— Stefan Padfield (@ProfPadfield) November 5, 2017
November 5, 2017 in Stefan J. Padfield | Permalink | Comments (0)
Saturday, November 4, 2017
Suddenly a little less certain
The GOP unveiled its tax bill this week. Below are a collection of links to commentary that I found interesting (taking a page from Stefan’s book, some are in the form of embedded tweets):
A lot to like and a lot to dislike in the Republican tax bill: “The tax bill aggressively takes on deductions in the individual income tax code, and channels the proceeds towards across-the-board cuts in income tax. Unfortunately, that good work is undone by expensive giveaways to the owners of firms, and unnecessary windfalls to the heirs of the rich.”
Tax Bill May Deal a Body Blow to LBOs: “The legislation includes a provision that would cap interest deductibility at 30 percent of adjusted taxable income, a dramatic shift from the 100 percent allowed now.”
Sports Stadiums Would Lose Access to Tax-Exempt Bonds Under House Tax Plan: “Lawmakers of both parties have long sought to limit the use of municipal bonds to benefit sports teams.”
Apple Among Giants Due for Foreign Tax Bill Under House Plan: “Earnings held in cash would be taxed at 12 percent while profits invested in less liquid assets like factories and equipment face a 5 percent rate.”
Proposal Aims to Eliminate Tax Break Linked to Performance-Based Pay for Executives: “The proposed changes would eliminate the tax break linked to performance-based pay for senior executives, raising some $9.3 billion in additional tax revenue over the next decade...”
Republican Tax Plan May Leave Future of Stock Options in Flux: “Under the GOP’s bill, option owners would be required to pay income taxes immediately when the contracts can be used to buy shares, instead of when they are actually purchased.”
US tax reform will boost innovation and entrepreneurship: “We will defer the tax on private stock gains until employees can actually realise those gains by selling the stock, or at least give them a reasonable amount of time to pay the tax bill.”
The GOP tax plan has a tiny 'bubble tax' that could end up raising taxes on the rich: “Every dollar after $1 million of income for an individual or $1.2 million for a couple would incur a surcharge. It would add $6 in taxes for every $100 of taxable income earned above those thresholds — essentially, an extra 6% tax.”
Senate Democrats falsely claim GOP tax plan will raise taxes for most working-class families: “The original report referred to 8 million households receiving a $794 tax increase. Somehow, when it got communicated down the line, that nuance was lost and it was translated into a talking point referring to all working-class families.”
How a Tax Cut Turns Into a Tax Increase: “In rolling out their plan, House Republicans focused on an example family — a married couple making $59,000 per year and with two kids. They said that family would get a tax cut of over $1,182 in 2018 (compared to what they paid in 2017). But, what they didn’t say is that a family making $59,000 would face a tax increase by 2024 relative to current law, with the tax increase potentially rising to nearly $500 by 2027.”
Republicans Bank on Future Congresses to Keep Family Tax Credit: “Taxpayers shouldn’t worry, Republicans say, because future Congresses will prevent the tax credit from vanishing. ... Rep. Carlos Curbelo (R., Fla.), said he thought members of both parties would ultimately support extending the break. 'That family credit is de facto permanent and you can take that to the bank,' Mr. Curbelo said.”
The GOP Tax Plan and Divorce: “The summary estimates that eliminating the deductibility of alimony payments will increase revenues by $8.3 billion over ten years.”
Republican Tax Proposal Gets Failing Grade From Higher-Ed Group: “In broad terms, the bill would eliminate or consolidate a number of tax deductions meant to offset the costs of higher education for individuals and companies, including the Lifetime Learning Credit, which provides a tax deduction of up to $2,000 for tuition, a credit for student-loan interest, and a $5,250 corporate deduction for education-assistance plans. The bill proposes new taxes on some private-college endowments and on compensation for the highest-paid employees at nonprofit organizations, including colleges and nonprofit academic hospitals. The plan would also tax the tuition waivers that many graduate students receive when they work as teaching assistants or researchers. Perhaps most significant, the bill would result in many fewer people itemizing their deductions for charitable gifts.”
Teachers spend nearly $1,000 a year on supplies. Under the GOP tax bill, they will no longer get a tax deduction: “Unlike other professionals, teachers are regularly expected to furnish their own supplies. They are often filling in gaps where students are unable to afford supplies — and where districts are unable to furnish them.”
House tax plan allows unborn children to have college savings accounts: “The tax-advantaged accounts, called 529s, help people save for future college expenses. Anyone -- a relative, a friend, or yourself -- can be named as a beneficiary at the time the account is opened. The House legislation unveiled Thursday would allow unborn children to be named as a beneficiary as well. It defined an unborn child as a 'child in utero' and further as 'a member of the species homo sapiens, at any stage of development, who is carried in the womb.'”
Why top tax writer Rep. Kevin Brady, father of two adopted kids, didn’t protect the adoption tax break: “Brady defended the decision to cut the adoption tax credit by pointing out that some families can't claim the credit because they don't pay enough in taxes or they don't itemize their tax bill.”
The Johnson Amendment Under GOP Plan: “The main concern of the repeal of the Johnson Amendment is churches will effectively turn into giant super PACs.”
Homebuilders tank as the GOP's tax plan caps a big benefit for homeowners: “the tax plan caps the mortgage-interest deduction, which subtracts interest payments from homeowners' taxable income, on new homes at $500,000.”
I'm actually in favor of capping mortgage interest deduction, but it has to be tied to median home prices on market by market basis
— Tanya Marsh (@TMAR22) November 2, 2017
Not high-profile,but GOP tax bill ends mortgage interest deduction for 2nd homes. That's great but it'll start a war in vacationer districts pic.twitter.com/9clOagFdyw
— David Dayen (@ddayen) November 3, 2017
The #GOPTaxPlan is not a populist plan. It favors hedge fund billionaires while screwing small business. @speakerryan @RepKevinBrady pic.twitter.com/c4rwL9U1t1
— Professor Bainbridge (@ProfBainbridge) November 2, 2017
New estimates from @ernietedeschi: 25M families will owe more taxes on their 2018 return under House GOP plan. By 2027, number grows to 47M! pic.twitter.com/o9SIcvt7oU
— Lily Batchelder (@lilybatch) November 3, 2017
1. So here are a couple of ways people will abuse the new passthrough rules. The guardrails are shaky, as @DanielShaviro has pointed out.
— Victor Fleischer (@vicfleischer) November 3, 2017
And, umm, an outraged twitter thread with associated R-language is here, but I will not embed it because this is a family blog.
November 4, 2017 in Ann Lipton | Permalink | Comments (0)
Friday, November 3, 2017
Competition and Community
I don’t have time for a substantive post today, but thought I would direct you to a post I wrote for the Miler Method online magazine, available here. The post focuses on competition and community.
I think the discussion in that post is relevant to law school, as so much emphasis is put on class rank and thus the competition can become especially fierce, potentially destroying community. Competition can certainly be a good thing, and can lead to progress and accomplishment, but competition does need to be contained at times.
November 3, 2017 | Permalink | Comments (0)
Thursday, November 2, 2017
ICYMI: #corpgov Midweek Roundup (Nov. 2, 2017)
"QualityScore is designed to help investors identify and measure #corpgov risk across portfolio companies" https://t.co/WHxCNGarGH ht @ynili
— Stefan Padfield (@ProfPadfield) October 30, 2017
"The gig economy[, unions,] and worker safety" https://t.co/JjhSLQ3mEz #corpgov ht @AnnMLipton @sharblock @CharlotteGarden
— Stefan Padfield (@ProfPadfield) October 30, 2017
"overly-broad accommodations of religious liberty ... undermine ... religious liberty itself" https://t.co/IUfcvKxcvP #corpgov
— Stefan Padfield (@ProfPadfield) October 31, 2017
Termination rights as a proxy for control. Should sound familiar to my students. #corpgov https://t.co/7w06AkGHiA
— Stefan Padfield (@ProfPadfield) November 1, 2017
"Hobby Lobby was a statutory case, not a
— Stefan Padfield (@ProfPadfield) November 1, 2017
constitutional case,...& does not control in Masterpiece Cakeshop" https://t.co/eUlJs626P2 #corpgov
UK company law requires "directors to promote the...company for the benefit of its members, the shareholders" 74Wash.&LeeL.Rev.1001 #corpgov
— Stefan Padfield (@ProfPadfield) November 1, 2017
#corpgov alert! #SEC's Corp Fin released Staff Legal Bulletin No. 14I today on 14a-8 shareholder proposals https://t.co/00YmNF89Wt
— Kristyn Hyland (@KristynHyland) November 2, 2017
November 2, 2017 in Stefan J. Padfield | Permalink | Comments (0)
Wednesday, November 1, 2017
The Hypocritical US Vote on the Cuban Embargo and What It Means for US Businesses
Every year, the United Nations holds a symbolic but important vote on a resolution condemning the U.S. embargo against Cuba and every year the United States and Israel are the only two countries to vote against it. Last year, the United States abstained in accordance with the rapprochement that the Obama administration began in 2014. A few hours ago, the U.S. and Israel stood alone and voted once again against the UN resolution, while 192 other nations voted for it. Ambassador Haley explained that the vote demonstrated, “continued solidarity with the Cuban people and in the hope that they will one day be free to choose their own destiny.” Prior to the vote she announced to the General Assembly that "today, the crime is the Cuban government's continued repression of its people and failure to meet even the minimum requirements of a free and just society… The United States does not fear isolation in this chamber or anywhere else. Our principles are not up for a vote … We will stand for respect for human rights and fundamental freedoms that the member states of this body have pledged to protect, even if we have to stand alone." The United States is indeed isolated in its thinking. Furthermore, the vote and the embargo inflame tensions with allies in Latin America that the U.S. needs for the war on terror and drug smuggling.
I feel strongly about this issue having visited the island three times in the past two years to research business and human rights issues. I’ve sat on a panel with Cuban lawyers and judges in Havana to discuss the embargo. I’ve attended countless seminars and meetings with lawyers and businesses who want to trade with Cuba. At the American Bar Association International Law Section meeting last week there were at least 6 sessions on Cuba. The world wonders why the United States places so much attention on this tiny island nation.
A few minutes ago, I put my finishing touches on my third law review article on Cuba (I had to wait to add in the UN vote). I argue that if and when the U.S. lifts the embargo and considers a bilateral investment treaty, it should require human rights provisions as a condition precedent for investor-state dispute resolution. I will post more about the article when it’s finally published but here’s a sneak peek of an argument relevant to today’s UN vote and the United States’ purported concern about the lack of human rights in Cuba:
[P]rior to lifting the embargo, the United States needs to examine its own record on human rights and how it treats other violators, otherwise it will have no credibility with the Cuban government. The U.S. Congress demands human rights reform in Cuba but has not been consistent in its own business dealings with other authoritarian or socialist regimes. For example, although the U.S. Department of State has criticized Cuba’s human rights record, China, another communist country with a poor human rights record, is the United States’ third largest trading partner. The United States lifted its trade embargo with Communist Vietnam twenty years ago and major U.S. companies now operate there today even though the U.S. government has leveled some of the same human rights criticism against Vietnam as it has against Cuba. The communist government of Laos did not fare much better than Cuba in human rights states department reports, but the U.S. government actively promotes potential investment opportunities there. This inconsistency in approach to human rights violators diminishes the U.S. government’s integrity in negotiating with Cuba. Tellingly, in its 2017 World Report, Human Rights Watch, a respected NGO, warned of the dangers of the Trump Administration from a human rights perspective. This hardly puts the U.S. in a strong bargaining position with Cuba when discussing the conditions on lifting the embargo.
The Trump Administration still has not released its official changes to the trade rules that it announced in June. In the meantime, although it’s hardly easy to do business in Cuba or with the Cuban government, U.S. businesses now remain in limbo until the implementing rules come into force. To be clear, I do not condone the human rights violations that the Cuban government commits against its people. In my upcoming article, I propose mechanisms to prevent foreign investors from perpetuating violations themselves. However, these same businesses that cannot do business with Cuba have no problem doing business with Russia, China, or other regimes with oppressive human rights records. Perhaps the Trump administration has not read State Department and NGO reports on those countries, but I have. Today, the hypocrisy was once again on full display for the world community to see.
November 1, 2017 in Corporate Personality, Corporations, CSR, Current Affairs, Human Rights, International Business, Marcia Narine Weldon | Permalink | Comments (1)