professor of law
Blood, Brains & Money
Blood Brains & Money explains how the rich get richer. Drawing on research in economics, tax, law, and history, I show how rising inequality is best explained by differences in labor income, not by investments or by inherited wealth.
My research focuses on tax policy, venture capital, private equity, and higher education policy.
I write the Standard Deduction column for the New York Times.
Consulting & Newsletter
I advise investment funds and private clients on public policy issues relating to tax, regulation, and philanthropy. I am not a registered lobbyist and seek to influence legislation only in the public interest.
professor, author, consultant, speaker, muckraker
Victor Fleischer is a Professor of Law at the University of San Diego, where he teaches and writes in the areas of tax policy, venture capital, private equity, entrepreneurship, and inequality. Before moving to San Diego in 2013, Mr. Fleischer taught in a full-time or visiting capacity at Columbia University, University of Colorado, University of Illinois, Georgetown University, UCLA, and NYU.
Mr. Fleischer also writes the “Standard Deduction” column for the New York Times. A 2006 draft of his NYU Law Review article, Two and Twenty: Taxing Partnership Profits in Private Equity Funds, is credited with sparking the debate about how to tax carried interest.
Mr. Fleischer lives in San Diego with his wife, Miranda, who also teaches tax law, and with his daughter, Penelope.
Blood, Brains & Money: Entrepreneurship and the New Inequality
S2016: Corporate Tax, Tax Policy, Venture Capital & Private Equity
New York Times column
Family, Buffalo Bills, Chicken Wings, IPAs
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“the intellectual godfather of private equity tax hikes” – Dealbreaker
I'm a Professor of Law at the University of San Diego, where I teach a range of tax and transactional courses.
Before joining the faculty here in 2013, I taught at several other law schools, including UCLA, Georgetown, Illinois, Colorado, and NYU.
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Columns, Research Papers, Appearances
A lack of transparency means that even university officials don’t know whether the investment fees they pay are reasonable. Source: Private Equity Fees Paid by Universities Deserve Examination – The New York Times
My op-ed today: http://nyti.ms/1E2Hi20
My latest Dealbook column: President Obama could change the tax treatment of carried interest with a phone call to the Treasury Department. But the White House will need a precise understanding of the regulatory landscape to make a change that is fair, easy to administer, and will hold up in court. via How the President[…]
But the clearest distortion is not size, but location. For multinational corporations based in the United States, taxes create an incentive to expand overseas operations by opening foreign subsidiaries, expanding foreign operations and acquiring foreign companies. Unlike a pure tax shelter, which generates paper losses to avoid taxes, the effects of tax expatriations are real.[…]
My take on the bitcoin guidance: Bitcoin is a digital representation of value, not a real currency, according to the latest pronouncement from the Internal Revenue Service.The I.R.S. on Tuesday released guidance indicating that Bitcoins and other so-called virtual currencies that do not have the status of legal tender in any jurisdiction would be treated[…]
A tax proposal released on Thursday by the chairman of the Senate Finance Committee, Max Baucus, addresses a topic that tends to make my students’ eyes glaze over: cost recovery.Cost recovery is a technical topic but one that may shape our economic future, because it affects the calculations of every business manager making a decision[…]
Changes to the tax code always create winners and losers. An ambitious plan to revise the system for taxing multinational corporations, released on Tuesday by the Senate Finance Committee chairman, Max Baucus, would hit technology companies and large pharmaceutical companies especially hard. Companies like Pfizer, Apple, Hewlett-Packard and Microsoft have become masters at reducing their tax liability in the United States by shifting income overseas.
These companies often hoard cash in offshore subsidiaries, and in the past they have successfully lobbied for a tax holiday to repatriate cash at lower tax rates. The Baucus proposal would, among many changes, end this practice of tax deferral and impose a minimum tax of about 20 percent on overseas profits — whether those profits are repatriated to the United States or not.
Other methods of tax avoidance have received less news media attention but are no less troubling. A recent deal by LIN Media, a media company backed by the private equity firm HM Capital Partners and the investment manager Royal W. Carson III, highlights two techniques. LIN Media owns 43 local television stations around the country,[…]
Potential investors in Twitters’s planned initial public offering may be struggling to estimate how much the company will have to pay in taxes in the future. An article in Politico on Friday highlighted some of the techniques Twitter might use to legally avoid taxes. Twitter’s biggest potential tax shelter is its history of losing money.[…]
Large multinationals based in the United States – among them General Electric, Pfizer, Apple and Citigroup – have been hoarding record amounts of cash overseas, mainly because of the 35 percent tax they would have to pay if they brought it back to the United States.
The American Jobs Creation Act of 2004 offered a temporary tax holiday that allowed firms to repatriate cash at about a 5 percent tax rate, but there were strings attached. The repatriated money was to be used only on permissible activities like research and development, capital expenditures and pension funding. It was not to be used for shareholder dividends or share repurchases.
The purported goal of the legislation was to create jobs, not simply to enrich shareholders at the expense of federal tax revenue. In recent years, companies have lobbied for another tax holiday.
Tax policy experts are suspicious of tax holidays, and most experts question the effectiveness of attaching strings to such legislation. Because cash is fungible, companies might be expected to use the repatriated money for permitted domestic activities that they would have conducted anyway, freeing up other cash to be used for dividends and stock buybacks. If companies merely reshuffle the use of cash without changing behavior, then the tax holiday amounts to a windfall to shareholders, not an effective economic stimulus.
The 2004 tax holiday brought back $312 billion in extraordinary cash dividends from foreign subsidiaries. How much of that cash was used for permitted activities, and how much for impermissible dividends and stock buybacks? A 2011 paper by Dhammika Dharmapala, C. Fritz Foley and Kristen J. Forbes, published in The Journal of Finance, estimated that 60 cents to 92 cents of every repatriated dollar was spent on shareholder payouts in 2005. The paper is Exhibit A in the case against future tax holidays.
A new paper by Thomas J. Brennan of the Northwestern University School of Law challenges that study and finds that, for the 20 companies that repatriated the most cash, 78 cents of every dollar was spent on permissible uses, and just 22 cents on impermissible shareholder payouts. Extending the analysis to 341 companies outside the top 20, Mr. Brennan estimates that about 40 cents of every dollar was spent on impermissible shareholder payouts, still much lower than the earlier estimate.