Tuesday, May 20, 2014

Tax Is the Hottest Legal Practice - Marginal Rate 367K %

Hawaii's Top Marginal Tax Rate: 367,100%

Terrance Jalbert (Hawaii), Gary Fleischman (Texas Tech) & Mercedes Jalbert (Institute for Business and Finance Research), Marginal Tax Rates Around the Hawaii Itemized Deduction Cliff:
HawaiiThe State of Hawaii allows paid State taxes as an itemized deduction on the State income tax return. The deduction is available only for individuals with Federal adjusted gross income less than $200,000. Hawaii also limits total itemized deductions to $50,000 for individuals with Federal adjusted gross income of $200,000 or above. These provisions create a tax cliff that implies extraordinary marginal tax rates. The added dollar of income from $199,999 to $200,000 triggers a loss of the entire tax paid deduction and caps itemized deductions at $50,000. We compute marginal tax rates for adjusted gross income levels around the $200,000 tax cliff. Results indicate marginal tax rates reach levels as high as 367,100 percent. The paper provides taxpayers with concise information regarding the importance of these Hawaii tax cliffs and suggests policy changes.

WSJ: Tax Is the Hottest Legal Practice Area

After years of relatively sluggish demand for legal services, there just might be a light at the end of the post-recession tunnel. An analysis of 2014 law firm financials thus far shows—wait for it—growth in demand for transactional practices, many of which were hit hard during the financial downturn.
"Through the first quarter we’ve seen strength in M&A, corporate work, real estate, tax,” said Mark Medice, Senior Director and head of Peer Monitor, a division of  Thomson Reuters that tracks performance among about 150 large law firms. ... [D]emand for corporate work was up 5% in Q1 compared to the same time in 2013, and has risen three of the past four quarters. Growth in demand for tax work rose by 6.7%, while real estate was up 3.7%--its fourth consecutive up quarter.