| ||2000 Erwin N. Griswold Lecture Before the American College of Tax Counsel|
How Will a Court Rule?
M. Carr Ferguson*
* The author owes thanks to many friends and colleagues for their advice in the preparation of this paper, especially his colleagues at Davis, Polk & Wardwell, Nancy Regan, Dana Trier, and Mario Verdolini, and his editor, Gersham Goldstein.
The invitation to deliver the Griswold lecture is a formidable honor on many counts, among them Dean Griswold’s personal inauguration of the series and the high respect in which we hold each of the prior lecturers in the series. Special tribute is due tonight to two of them who left us within days of each other, John Nolan and Judge Ted Tannenwald. Their professional lives enrich and guide our own. "How would Jack have handled this?" or "How would Judge Tannenwald have ruled?" we can ask ourselves with profit throughout our careers. In a sense, such questions evoke the title of Erwin Griswold’s first lecture, "Is the Tax Law Going to Seed?" 1 His remarks that evening were informal and personal rather than scholarly, an example I hope to follow this evening, but they were also characteristically perceptive and blunt.
I did not attend the Dean’s law school and became acquainted with him only after his tenures at Harvard and the Solicitor General’s office, though I knew him much earlier through my father, who served with him in the Department of Justice in the early Thirties-Dean Griswold as an assistant to Judge Thacher, then Solicitor General, and my father in the Tax Division, or, more accurately, then, the Tax Prohibition Division-a title borne with no sense of irony, since enforcement of the Volstead Act was at least as important then as enforcement of the revenue laws. In those days, the entire staff of Department of Justice could pose for their annual group picture on the steps of the Department’s old building at the corner of Vermont and K-from the Attorney and Solicitor Generals, right down to the newest messengers. The camaraderie and sense of privilege in representing the people of the United States shared by that small band of lawyers ran strongly through to my own days in the Department a generation later.
Generations of lawyers respected the Dean’s strong leadership of the Harvard Law School, his devotion to his wife of sixty-three years, his blunt, no-frills teaching and scholarship. His casebook, which I used as a beginning teacher of taxation forty years ago, was less concerned with its underlying policies or administration than how courts would apply the law to a given situation. Like Gerald Wallace, whose teaching Professor Bittker so perceptively recalled in our second Griswold Lecture, 2 the Dean sought not a pro-taxpayer or pro-government interpretation but the correct interpretation, which for him was how a court would rule, if fully advised. Once convinced of what was right, he could be adamant. Like Boris Bittker, Jack Nolan, and our other Griswold Lecturers, the Dean regarded himself as a lawyer first and only then an expert in taxation. Beyond the tax law, we remember his unflinching championship of the Fifth Amendment rights exercised by targets of Senator Joe McCarthy’s loyalty inquisition in the early Fifties, at a time when Harvard itself was in the Senator’s gun sights as a haven for liberals-and worse. Professor Berman, then the faculty’s Soviet law expert, recalled his anxious inquiry of the Dean as to whether it would be safe for him to attend a professional conference in Moscow. The Dean said brusquely, "If anyone asks, say I told you to go." He was a paragon of honesty, integrity, and courage, which Winston Churchill termed the virtue on which all other virtues depend. But he was also a positivist concentrating on the tax law as it existed. He asked that we first understand what it is and how it affects human affairs in this world, before considering how it might be improved in the next.
Years ago, he appeared with two other senior tax professors on a panel to discuss the art of teaching tax law. One of his colleagues described how he had developed, from one student’s question of why home mortgage interest was deductible, a disquisition on the ability to pay, horizontal equity, and distributive justice. A second panelist, impressed with the tax law as a branch of fiscal policy, explained how the question could have been used to further the students’ appreciation of how the deduction fueled the home building industry. The Dean finally commented tersely, "If students of mine had been foolish enough to ask such a question, I would have asked them to open the Internal Revenue Code and read Section 163." His former students in the audience probably found his reaction as predictable as his glass of Catawba juice at a cocktail party.
In these past weeks, while thinking about what to say to such good friends and distinguished colleagues tonight, like many of you, I was asked to evaluate yet another in the parade of tax schemes offered these days to our corporate clients. Typically, they are based on improbably exploitive reading or even ignorance of the tax law. Especially painful was one of them attributed to a lawyer who had gained prominence while entrusted with high public office. The contrast between the aggressive marketing of such products and the tax law as practiced by respected members of our College prompted me to revisit Dean Griswold’s question of whether the tax law is going to seed, and we practitioners with it. Although my remarks address the current wave of aggressive corporate tax schemes, I hope not to trench on Jim Holden’s thoughtful discussion last year of our ethical responsibilities under Circular 230 or the Code of Professional Responsibility. 3 Instead, I would like to focus on the contrast between the practice of tax law as conceived by prior lecturers and what we experience today.
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1 Erwin N. Griswold, Is the Tax Law Going to Seed?, 11 Am. J. Tax. Pol’y 1 (1994). [Back to text.]
2 Boris I. Bittker, The Erwin N. Griswold Lecture, 11 Am. J. Tax. Pol’y 213 (1994). [Back to text.]
3 James P. Holden, Dealing with the Aggressive Corporate Tax Shelter Problem, 52 Tax Law. 369 (1999). [Back to text.]