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27 NewsQuarterly 1 (2007-2008)

handle is hein.journals/newsqtrly27 and id is 1 raw text is: POINT & COUNTERPOINT Tax-Free Overtime Pay With the highest number of French voters going to the polls in 40 years (84%), Conservative Nicolas Sarkozy defeated Socialist S6golene Royal in France's presidential election in May. Sarkozy's platform for France was one of change, attempting to spur economic growth that was 2.1% last year, an increase that ranked tenth of the twelve European countries that utilize the euro. Point & Counterpoint 1 Tax-Free Overtime Pay From the Chair 3 To stimulate the economy, the world's sixth largest and second in Europe to Germany, Sarkozy proposes the elimina- tion of a 2000 French law that mandat- ed a 35 hour workweek, a law designed to help create jobs for more people and give current workers more personal time. Sarkozy claims that the law did not cre- ate additional jobs but instead created expectations of current workers to do more in less time. To encourage French workers to work more and to improve the slumping French economy, Sarkozy proposes to make overtime pay tax free. In this Point & Counterpoint, Professors Richard Schmalbeck and Michael McIntyre debate the merits of taxing labor income. Professor Schmalbeck offers his view that Sarkozy's plan offers a genuine choice between work and leisure. Professor McIntyre argues that his plan raises significant policy issues of tax fairness. The NewsQuarterly encourages readers to submit responses or comments to these essays, which may be published in a subsequent issue. -Christopher M. Pietruszkiewicz, LSU Law Center Baton Rouge, LA News Briefs 4 Interview: Sheldon Cohen 5 Points To Remember 13 (1) Health Savings Accounts; (2) Guidance on Sections 403(b) and 409A; (3) Shrinking Boomer Social Security Retirement Benefits Tax Section 22 Survey Report National Conference 24 Tax Gap Report Government Submissions Boxscore 28 POINT The Sarkozy Proposal is Worth a Try By Richard L. Schmalbeck There is much to be said for this plan on grounds of efficiency. Oversimplifying more than a bit, one can say that taxes tend to be less efficient if they distort people's choices. So if people buy a sec- ond-choice good because of a stiff tax on their first choice, or pass up an oppor- tunity to make some extra cash working an occasional Saturday because of an *Duke University School of Law, Durham, NC. income tax rate that's too high, there is a loss in consumer welfare. Economists generally think that taxes on income from employment are accept- ably efficient, because they do not seem much to prevent people from engaging in employment. This is in part, however, because of rigidity in labor markets. We continued on page 10 CLE Calendar Tax Bites At the Ballgame Committee Spotlight SALT Defending Liberty Pursuing justice Secton o Taxtio SNErSiU[A T Ri ATION Ir.. B., AM-m

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