New Jersey Might Require Equal Parenting Time in Child Custody Cases

One of the most controversial aspects of child custody is who has physical custody. Schedules can differ wildly from 90/10 (where one parent has custody 90% of the time and the other parent 10%) to 50/50 (50% time for each parent). Most judges and mediators will suggest an equal time split and then adjust the time allocated based on the case.

What is New Jersey’s Approach?

New Jersey state legislators have proposed bills that would make 50/50 custody the default child custody arrangement. The bills, S3479 and A5189, would make equal time between parents the default child custody arrangement, unless a parent can show that equal time would be harmful to the children. Currently, New Jersey courts do not presume equal parenting time. Instead, family law judges look to the best interests of the child. The “best interest” test involves a wide variety of factors, including but not limited to: stable environment, preference of the child, parents’ ability to agree and cooperate, and who had custody of the child(ren) prior to parental separation.

child custodyAt first glance, a law requiring equal time between parents doesn’t sound like a bad idea. If both parents have equal time with the children, there would be one less thing that parents fight over during a divorce. More importantly, the children would get to spend time with both parents and they wouldn’t feel cut out of one parent’s life.

Are There Any Downsides?

However, there are very real downsides to this approach. Making “equal time” the default prevents judges from making real decisions in cases where judicial discretion is most needed. In some cases, a parent cannot afford equal time. A parent with a busy work schedule needs to work more hours to pay for the child (and spousal) support. In other cases, a parent might be closer to a better school or have more options in education. Since the bill only allows parents to argue against equal time if there would be harm to the children, an automatic equal time schedule might actually cause more hardship on the family.

Mandatory equal time also puts domestic abuse victims at a significant disadvantage. The court would have to assume that equal time is best unless the victim can show that equal time would be harmful. Similarly, a parent with drug or alcohol problems would benefit from a default 50/50 custody schedule. Although the bill allows parents to argue against equal time if it would be harmful to the children, requiring a parent to overcome a legislative presumption creates an unnecessary uphill battle that shouldn’t exist in the first place.

Replacing child’s best interest with equal time for both parents also distorts the priorities family courts should have when determining child custody. The goal of child custody and child support is to ensure that the children are taken care of. Proponents of default equal time claim that changing the law will be a good thing because it will cut down on litigation and parental fighting. Child custody hearings should not consider these goals because it puts the parents’ money and feelings over the wellbeing of the children.

Making child custody automatically 50/50 between parents might sound like a good idea, but the plan is filled with hidden dangers. Default equal time puts greater emphasis on the parents’ needs over the children’s well-being. It would continue to victimize domestic violence victims. And it would standardize an area of law that often turns on individual circumstances and facts of the case.

GOP Tax Plan: How Will the New Tax Plan Affect You?

With the GOP tax plan jelling into a final form–reaching a compromise between the Republican majority in the House and Senate–we will likely see a vote on a plan before the end of the year. When that vote happens, it’s good odds that we’ll see this plan become your reality. The plan itself has seen its share of critics, both Republicans (who have criticized the bill for both going too far and not far enough) and Democrats (who have been displeased with both the fact that they have had nearly zero input on the plan and the impact it will have on social welfare plans as well as low to middle income households) have weighed in for and against the plan.

There’s still some ongoing debate over elements of the bill, and especially over exactly how deep to make the cuts to the corporate taxation rate. The bill may still be unable to reach a form that is agreeable to enough Republicans–the majority is narrow enough that it only takes a few dissenters to block the bill. It also is a possibility that this situation might leave Republican leaders too uncomfortable with the plan’s chances to bring a vote before the session ends. However, realistically we’re going to see this tax plan pass. The GOP is looking for a policy win after their failures to deliver on their promises regarding healthcare. With that in mind, it’s important that you understand the impact that this tax plan will have–both on you personally and in general.

The Basics of the Plan

As it is, the more general impact of the plan depends partially on who you ask. In their original pitch, Republicans said that the extremely optimistically named Tax Cuts and Jobs Act would cut taxes for around three-quarters of U.S. citizens. However, these calculations left out some crucial elements such as how these cuts would be paid for. The procedural rules surrounding how the tax plan is being passed requires them to offset any cuts they make with revenues elsewhere in the plan–something known as keeping the bill revenue neutral. Once paying for the bill is considered, experts have indicated that the numbers essentially reverse with about three-quarters of U.S. citizens paying more overall. According to the Tax Policy Center, a non-partisan organization, those making less than around $86,000 a year will not benefit from the plan.

These calculations are based on the most recent version of the bill. Without a finalized plan, any calculations are approximations but it’s likely the final bill will be quite like this one. The primary topic the House and Senate are debating at this point is how to pay for the cuts. This debate has encompassed retirement plans, welfare programs, state and federal tax write-offs, and-most recently-reducing the cuts to the tax rate in the program. The original–and current plan–cut the corporate tax rate from 35% to 20%. There has been substantial debate over changing that number to 22% to help cover costs for the cuts–a change that has seen fierce opposition from many Republicans in the House and Senate.

GOP Tax PlanOther substantial changes include changing the number of tax brackets from seven to five and changes in how employees and independent contractors are taxed. Let’s look at any potential worries you might have about the tax plan and the impact it is likely to have on you and your business.

Your Retirement Plan

While those drafting the tax plan originally looked at 401(k) plans as a potential target for changes in making the plan revenue neutral. However, fortunately, retirement plans are currently off the chopping block. The main concerns were over the potential that 401(k) plans may have ended up taxed like Roth IRAs. 401(k) are currently made pre-tax with taxes paid as income when you start making withdrawals. Roth IRAs on the other hand are taxed when you make the original contribution.

As of now, the way retirement plans are taxed does not look like it will change substantially. The tax-free contribution limit for 401(k) will still be $18k ($18.5k next year) for those age 49 and below and $24k for those 50 and up.

Wages v. Other Forms of Income

One substantial change from the bill is that wage based income will be taxed at a substantially higher rate than independent contractors, sole proprietors (people who own a business by themselves), partnerships, and closely held corporations (basically corporations owned by a small number of people with no public stock). More than ever before, how high your taxes are will be linked to the organizational structure of your business or your occupation.

This means a couple of things. For most U.S. citizens who earn a wage as an employee, it likely means at least a small tax increase. It also means that forming a business entity has more tax advantages than ever before, a lot of people will–for good reason–make efforts to identify themselves as a business of some sort for tax purposes. This obviously has advantages for people running their own business (even a single person can form an LLC or closely held corporation in many or most situations) or larger corporations. However, it can pose a disadvantage for many. Two people doing substantially the same job will have different tax treatment based on how they are classified.

This is particularly problematic as defining what is wage income and what is business income can be a tricky proposition. Regardless, if you run a business and have not yet formed a business entity to better define income, now would be a particularly advantageous time to do so. Pass-through businesses such as partnerships are receiving a 23% deduction rate, a strong motivation for promotions for highly paid employees and restructuring. However, it is worth noting that the current bill does not allow households with a $500,00 or higher joint income and single payers with a $250,000 or higher income to qualify for the pass-through rules. These are obviously people who are better prepared to pay more in taxes. However, as written the law creates an odd situation for those making between around $530k and $624k–requiring them to pay as much as 85% of their income as taxes. While these are again people capable of paying more in taxes, this still seems unintentionally high.

Pass-throughs, which range from an ice cream stand to multibillion-dollar operations like Georgia-Pacific (a Koch Industries subsidiary) and Fidelity Investments, don’t pay corporate taxes. Instead they pass through income to their owners or shareholders, who pay taxes at the ordinary rate on their individual returns.

To summarize, the tax plan has many potential advantages unless you are classified as an employee–as most people are. If the tax plan goes through as is, expect to see shifts in how income is classified to take advantage of the new provisions.

How Will This Impact Your Mortgage and Your Estate?

One of the most substantial differences between the Senate and House approaches to the new plan revolves around your estate (what you leave behind when you pass) and your mortgage. The House plan completely repealed the estate tax, the Senate bill does not go this far. The House plan also has a lower cap on the amount you can deduct from your taxes based on what is paid on mortgage interest–$500k versus the House’s $1M cap.

Federal Deductions for State Taxes

Another change the tax plan has seen since its introduction is its approach to the deductions you can take for the taxes you pay on a state or local level. Initially, the plan would have just completely removed your ability to deduct taxes paid to your state, county or municipality.

This led to substantial argument among Republican Representatives, threatening the small margin by which the bill would pass. Ultimately, although they reached a compromise, you’re still going to see the amount you can deduct drastically limited. State and local deductions are completely gone for both sales and income tax. However, up to $10k can be deducted for local property taxes.

An Incomplete Plan

The tax plan is incomplete both in the sense that it is currently being debated and has not reached its final form and also in that it has some serious potential holes in it. The advantages of incorporation under the bill are such that putting investment profits into a corporation or making your private business a pass through are going to be a more attractive possibility than ever. This isn’t bad in and of itself, but it will lead to many classification nightmares as people scramble to avoid the higher taxes on employee wages. What’s more, with the majority of U.S. citizens earning on a wage basis, the changes are unlikely to be beneficial to these people.

As mentioned several times, the margins by which this plan is passing are slim but very few Republican Senators have held out much in the way of opposition to their party’s plan. A vote needs to happen fairly soon if the tax plan is going to be implemented in a timely fashion, so what we have now is likely very close to the final version of the plan.  There could still be some changes, and consulting a tax professional as to how this overhaul will impact you and how you should react is a very good idea.

Don’t Forget: Trump’s Name Found in Panama Papers

Just a few days back, multiple Pulitzer Prize winning journalist Jake Bernstein released a report detailing the first appearance of President Trump in the financial scandal that is the Panama Papers. This is not the only time Trump’s name appears in the papers, the name Trump is in there nearly 3,500. But not all of these necessarily involve Trump himself and, frankly, just being in the papers at all isn’t always an issue by itself. It’s important to understand the context of Trump’s appearance and exactly what the Panama Papers–and the later Paradise Papers–are.

The Panama Papers, leaked back in 2015, are so named because they were taken from a Panama based law firm specializing in forming offshore corporate entities known as Mossack Fonseca. The leak was substantial, 11.5 million financial documents involving nearly 215,000 offshore corporate entities substantial. Offshore entities aren’t illegal in and of themselves–although they’re obviously illegal when used for tax fraud. However, these documents quickly became infamous both for the high profile individuals and companies whose names appeared therein or were connected to those who appeared and because an enormous number of entities turned out to be shell corporations involved in tax evasion, fraud, money laundering for criminal organizations, and evading international sanctions.

Obviously the sheer number of documents made parsing the information contained within a herculean task, thus the revelations still coming out years later. This situation was made even more overwhelming as the Paradise Papers were leaked in last few months.

Second only to the Panama Papers in sheer amount of the data leaked, they incorporated even more documents than their denser predecessor with 13.4 million documents on offshore investments. The documents came from a law firm known as Appleby. This leak dealt mostly dealt with situations that involved legal tax havens–although there were certainly several sketchy situations that caused embarrassment and drew greater scrutiny on companies such as Apple–already investigated by the U.S. Senate in 2013 over allegedly taking advantage of tax havens in Ireland and Bermuda.

It’s important to distinguish that the practice of using a tax haven–moving money to places where they have very little in the way of regulations on income–is at least legally distinguishable from illegal tax evasion. To be frank, a certain amount of efforts to minimize what you pay in taxes is just common sense. However, these are the sort of tax havens which have caused companies, and wealthy individuals, to draw criticism for gaming U.S. tax laws.

panama papersTrump is not alone among leaders with financial interests found amongst the leaked papers. For example, Iceland Prime Minister Sigmender Gunnlaugsson resigned his office after the papers showed he had not disclosed some relevant financial interests when he took office. Trump also isn’t the only person in his administration who has shown up in the papers. Let’s look at exactly what these recent revelations really show–and what they don’t show.

Trump in the Panama Papers

The recent reports on Trump’s appearances on involve a sale by Trump of a New York condo in Trump Palace to a shell company known as Process Consultans (that is not a typo, it is unclear if the corporation was made in haste or if the lack of a “t” made the company harder to find). “Consultans” was owned entirely via bearer shares–a common means of transferring property anonymously. Bearer shares usually see quite a bit of regulation due to how commonly they are involved in money laundering.

Let’s make it clear, this is mostly important now because it is first chronological occurrence of Trump himself being identified in the Panama Papers out of the nearly 3,500 times his name appears. The Panama Papers contain crucially important information on financial goings on and potential crimes across the world. However, the information here is incredibly thin. There is little on how much Trump actually knew, the sale took place in 1994, there are essentially no remaining documents on the apartment rental prior to 2005 (none of which involve “Consultans”), and “Consultans” itself is about as easy to find information on as you’d expect a shell company named “Consultans” to be. The primary criticism here has been Trump’s failure to ask questions about who was purchasing his real estate, especially when it was in such suspicious circumstances. These suspicious circumstances have been exacerbated by revelations in the papers regarding others in his administration.

Trump Administration in Paradise Papers

The Paradise Papers last month revealed financial ties which have drawn more heat on the Trump Administration–specifically U.S. Secretary of Commerce Wilbur Ross. The papers revealed Ross has a financial stake (to the tune of $68M) in a Russian energy company partially owned by Kirill Shamalov. Shamalov is Vladimir Putin’s son-in-law, his father Nikolai Shamalov is currently under U.S. sanctions. These revelations are mostly an issue due to the larger political situation, the lack of full disclosure by Ross in his confirmation hearings, and–most importantly–that these holdings were some of the few investments Ross chose to keep even after assuming his position.

Several politicians have called for inquiries into this from the Government Accountability Office or GAO. There is the potential for legal wrongdoing here, but honestly the smell of impropriety is likely greater than the any real potential for criminal misbehavior here. If nothing else the situation has given rise to a great deal of debate in regards to the exact outlines of the disclosure requirements before taking a position such as Secretary of Commerce and reflection on whether those requirements are sufficient.

The Importance of the Papers

Trump has been criticized for his financial connections before, and many these accusations are well founded. In his campaign he professed to owning 515 separate companies, however only 378 of them can be found registered in Delaware. It’s far from a stretch to imagine Trump has offshore holdings which may appear in the Panama Papers. However, offshore holdings aren’t illegal in and of themselves (again, barring tax fraud) and the information so far is a bit too thin to draw any substantial conclusions from. What is clear is that the Panama and Paradise Papers leaks have revealed financial goings on at a level hitherto unthought-of, tax money hidden or sheltered away from the U.S. government, fraud, and more.

Many politicians on both sides of the aisle and internationally have seen their financial goings on popping up in the Panama or Paradise Papers (or both). Queen Elizabeth, church leaders, Queen Noor of Jordan, one-time Democratic Presidential hopeful Wesley Clark, and even Madonna. The level of involvement of each person is sometimes hard to put together from the facts in the papers and sometimes clear.

However, they have for the most part published explanations for their holdings or involvement. Trump–the “America First” president–has had essentially no comment individually for the thousands of times his and his company’s name appears in the papers regarding offshore holdings–the type often used for money laundering or seeking tax havens from the U.S. government. There certainly needs to be more information before drawing conclusions on an individual level. However, the Panama and Paradise papers have revealed, and will continue to reveal, financial workings that are important even beyond what they imply from individual to individual.

Travel Ban 3.0: Third Time the Charm?

The Supreme Court has granted the federal government’s request to fully enforce the set of restrictions known as the “travel ban” while the Appeals Courts hear the merits of the ban. The Court ruled 7-2 that individuals from eleven countries could be prevented from entering the country. There’s a lot of confusion about how the ban works, what exceptions exist, and the arguments being made. The full order can be found here. Here’s a quick FAQ to break everything down:

Which Countries Are On the List?

Individuals from the following eleven countries are prohibited from entering the United States: Iran, Libya, Yemen, Somalia, Syria, North Korea, Venezuela, and Chad. That means the U.S. will not approve Visas for people traveling on passports from those eleven countries.

Who Does the Ban Apply To?

The third version of the travel ban suspends the following visas:

Chad – Only B-1 business and B-2 tourist visas are suspended. All others, including F and M visas for students and H visas for temporary workers, are not suspended.

Iran – Only F and M student visas and J visitor visas are permitted to enter the country.

Libya – Only B-1 business and B-2 tourist visas are suspended. All others, including F and M student visas and H visas for temporary workers, are not suspended.

North Korea – All entry is suspended.

Syria – All entry is suspended.

travel banVenezuela – The B-1 business and B-2 tourist visas of certain government officials and agencies from Venezuela are suspended.

Yemen – Only B-1 business and B-2 tourist visas are suspended.

Somalia – All entry of immigrants is suspended (immigrants are individuals who intend to permanently reside in the United States).

Are There Any Exclusions or Exceptions?

There is a difference between an exclusion and an exception. An exclusion occurs when the law is written in a way so that the law doesn’t apply to that person. For example, the ban on Chad and Yemen suspends business and visitor visas. Student visas are not included in the suspension. Therefore, students are excluded from Chad and Yemen suspensions.

An exception is when the law does apply to that person, but the law suspends the application to that person. The travel ban currently has the following list of exceptions:

  1. Any lawful permanent resident of the United States.
  2. Any foreign national admitted into the United States who entered between the first and second versions of the travel ban and the current one (paraphrased).
  3. Any foreign national who has a document other than a visa that is valid between the first and second versions of the travel ban and the current one (paraphrased).
  4. Dual citizens traveling on a passport issued by a country not on the travel ban list.
  5. Any foreign national traveling by a diplomatic visa.
  6. Any foreign national granted asylum by the United States or protection by the Convention against Torture, or any refugee already in the United States.

For example: Although business visas from Chad are suspended, a duel citizen of Chad and France could claim an exception to the business visa ban if that person also had a passport issued by France. In contrast, a person holding a student visa from Chad would still be allowed to enter regardless of dual citizenship because that person was excluded from the ban.

What are the Differences between Each Version of the Travel Ban?

The first version, Executive Order 13769, was signed by Mr. Trump on January 27, 2017. It banned individuals from seven different countries, all with Muslim majorities. The ban would have lasted for 90 days for non-refugees and 120 days for refugees from those countries. The ban left a loophole from refugees of “religious minorities.” This version was suspended by federal judges and the administration rescinded the order a few days later.

The second version, Executive Order 13780, was signed in March 16, 2017. This version removed Iraq from the list and dropped the “religious minority” exception, but kept the 90 days non-refugee and 120 day refugee expiration dates. Federal judges suspended this second version until the Supreme Court allowed a partial ban to go into effect on June 26. The Supreme Court added a “bonafide” exception, whereby persons would be allowed to enter the U.S. if they had a genuine and sincere reason to be in the country, including family.

The third travel ban, Proclamation 9645, ended the expiration dates, removed Sudan from the list, and added North Korea and Venezuela. The Supreme Court’s December 4th order allows this version of the ban to go into full effect without the bonafide exception.

Can a District Court Judge Stop an Executive Order Nationwide?

The first two travel bans were enjoined by District Courts in Hawaii and Washington State.  District Court judges who issued the nationwide injunctions, the lowest judges in the federal judiciary, have been criticized for exceeding their powers. It seems absurd that the lowest member of the judicial branch can stop the highest member of the executive branch.

Federal Rule of Civil Procedure 65 gives District Court judges the power to issue preliminary injunctions before trial to ensure that the status quo remains while the case is being heard. There is no restriction as to the scope of the injunctions. The Supreme Court writes the Federal Rules of Civil Procedure subject to Congressional approval. Since neither the Supreme Court nor Congress has seen fit to narrow the scope of the District Court judges’ powers as to injunctions, the judges’ retain the power to issue nationwide injunctions on behalf of the Supreme Court.

The Trump Administration is not the first one to complain about the power of District Court judges. The Obama Administration also filed appeals when judges in the Fifth and Sixth Circuits blocked President Obama’s deferred action programs. The judges in those circuits upheld the District Court judges’ right to issue nationwide injunctions.

As the Fifth and Sixth Circuit Appeals Courts pointed out, it makes sense to issue nationwide injunctions in immigration cases. If the injunction were merely limited to the state in which the District Court sits or to the Circuit Court hearing the case, the immigrant could simply choose a different state or circuit to go to. Since immigration is a national issue and one of the parties is usually the federal government, a nationwide injunction would preserve uniformity of federal immigration law. The federal immigration policy of Hawaii cannot be different from the federal immigration policy of Texas or New York. Nation-wide injunctions are the only way District Courts can preserve the status quo without creating different federal immigration policies for different states.

So is the Travel Ban Constitutional Now?

Although the Supreme Court has lifted the lower court’s ban on the travel ban, the Court has yet to rule on its constitutionality. Given that the decision to lift the injunctions was a 7-2 decision, the ban does stand a decent chance of surviving. However, both the Ninth Circuit and the Fourth Circuit need to hear arguments and render separate rulings before the Supreme Court will hear arguments. If the Supreme Court decides to hear the case, a final ruling on the travel ban will likely come out in middle to late 2018.

Repealing Sports Betting Ban Would Be a Win for States Rights

Governor Chris Christie might have one last opportunity to salvage his reputation before he leaves office next year: Christie vs. NCAA, arguably the biggest states rights case that the Supreme Court will hear. If Christie wins, the federal ban on sports betting will be lifted, a massive win for Atlantic City and sports fans around the country.

Congress passed the Professional and Amateur Sports Protection Act, or PASPA, with the stated goal of protecting the integrity of sports. PASPA made it illegal for a government entity to “sponsor, operate, advertise, promote, license, or authorize by law . . . a lottery, sweepstakes, or other betting, gambling, or wagering scheme” on competitive sports. Critics argued that its real goal was to create a monopoly for states that had existing sports betting laws. The law grandfathered in Nevada’s sports betting industry, as well as sports lotteries in Oregon, Delaware, and Montana. States like New Jersey had one year to initiate their own sports bettingprograms, but one year is often too short for states to write new laws.

Nevertheless, New Jersey tried again in 2012, but courts ruled in favor of PASPA. Governor Christie tried a different approach; instead of authorizing sports betting, New Jersey just decriminalized sports betting in its borders. Lower courts still saw that as a violation of PASPA, but the Supreme Court has taken up the case.

Controlling the States or Interstate Commerce?

The arguments are sophisticated, but the heart of the matter is whether a federal law that prevents repeal or modification of a state law “commandeers” the regulatory power of the states. The federal government is not allowed to meddle with the purely internal affairs of a state. The Constitution only grants Congress a certain set of powers, the broadest one being the regulation of interstate commerce. The question the Supreme Court must answer is whether prohibiting states from decriminalizing sports betting is a regulation of interstate commerce. If not, then the PASPA would be unconstitutional.

New Jersey is relying on a 1992 Supreme Court case, whereby the federal government attempted to direct states how to best dispose of their radioactive waste. However, there are many more Supreme Court cases where the federal government had the authority to direct the behavior of the citizens directly. The federal criminalization of marijuana is the most (in) famous example.

Congress is prohibited from telling the states how to act. New Jersey seeks a judgment that is unconstitutional for Congress to tell the states what not to do. New Jersey wants the Court to go further, and rule that Congress cannot tell the states what they can’t do inside their own borders.

If Congress cannot tell a state where to put their radioactive waste, then Congress should not be able to tell a state where they cannot store their waste. If Congress did have that power, then the federal government could restrict the state’s behavior until the federal government gets what it wants. For example, suppose there are five waste dumps in a state, but Congress wants the state to only use Dump #1. Congress could just tell the state that it can’t use Dumps #2-5. Congress didn’t explicitly tell the state where had to store its waste, but the effect is the same since Congress removed all other options.

New Jersey would argue that the same is true for sports betting and potentially other state’s rights issues. If Congress can not only prohibit New Jersey from legalizing sports betting, but prohibiting New Jersey from decriminalizing sports betting, states’ rights would be extremely restricted. States would not be able to legalize marijuana. States would not be able to restrict abortion. The list of issues impacted would be inevitably long.

On the other hand, if Congress were prohibited from prohibiting certain state actions, the federal government would lose a lot of power. This would almost certain shut the door on whether states could restrict state resources if federal immigration enforcement wants state assistance. Previous federal efforts to prohibit state discrimination against LGBT would permanently become a relic of the past.

The Country Needs More States Rights

The biggest argument against PASPA is that it directly limits the states. A federal ability to dictate what the states cannot do severally limits the local autonomy of the states. If the Court is sincere in its belief that states should be “laboratories of democracy,” where different states can try different policies so that others can learn from the experiments, the Court should strike down PASPA. If some states believe that sports betting are a moral hazard, they can ban sports betting if they wish. If other states believe that the economic benefits of sports betting outweigh other concerns, they should be allowed to try.

Moreover, giving more issues to states to decide would help pacify some of the political tension today. Currently, most states lean heavily in favor of one political party over the other. With the federal government switching between two extremes every eight years, people are becoming angrier whenever the other party wins. With the body politic as divided as it is today, the Court can protect the Republic from further strife by devolving more power down to the states.