Meet New Professor Richard Winchester: Tax Gaps, Housing Inequities, and a Little Jazz

This semester, the Brooklyn Law School community welcomes to the faculty Professor of Law Richard Winchester, one of the top employment tax law experts in the country. 

Most recently a professor at Seton Hall University School of Law, Winchester brings a deep bench of expertise, experience, and scholarship in state, federal, and international tax law and policy, as well small business and finance, which he will be sharing with his students in the Federal Income Tax course and the International Tax Skills Workshop. 

A professor of law since 2003, when he began teaching at the Thomas Jefferson School of Law, in San Diego, Winchester entered academia with more than a decade of experience in practice as a corporate tax planner, helping privately owned and publicly traded companies structure their business operations and financial transactions. His practice concluded as an international tax attorney in the national tax office of PricewaterhouseCoopers (PwC), where he advised both U.S. firms investing abroad and foreign firms investing in the United States. 

His scholarship on tax law and policy have also made him a go-to expert on the subject, ranging from academic conferences and speaking engagements to media outlets like CNBC, the New York Times, and the Wall Street Journal. 

So, given his deep focus on all things taxation, it may be somewhat of a surprise that Winchester’s latest research-in-progress explores the origins and business intricacies of New Orleans’ Pontchartrain Park, a suburban-style subdivision for that city’s large Black community whose construction in the 1950s was financed by the Federal Housing Administration during a time when the agency restricted its programs to whites.   

The Brooklyn Law Bridge recently sat down with Professor Winchester to talk about that research, as well as the scholarship in employment tax that gained him attention in Congress, how his career took shape, as he says, “by accident and by design,” and life outside the classroom. The interview below has been edited for space and clarity. 

Brooklyn Law Bridge: How did you make your way to tax law and policy after studying international and public affairs as an undergrad at Princeton and earning your J.D. from Yale Law?  

Richard Winchester: I trained in college to be a generalist, and after working in management at Prudential Insurance and Chrysler, and considering getting my MBA, I became interested in studying law after meeting attorneys through my involvement in local political circles.  

I originally wanted to be a civil rights litigator, having done civil rights work for two summers during law school, one in policy and one in litigation at the NAACP Legal Defense Fund. But I found that I don’t have the temperament to be a litigator.  

After clerking for two years for Chief Justice Robert N.C. Nix, Jr., of the Pennsylvania Supreme Court, I was hired as an associate at the Philadelphia law firm Wolf Block. And in the course of that first year of settling in, the tax department came to me and said, ‘We have work, would you consider doing it?’  For me—and this is what I tell students—the first question you want to ask when you’re thinking of where your focus should lie is, Where’s the work?    

I’m a perfectionist, and to be a tax planner you have to be a perfectionist. As one of the partners said to me, “You can be a business lawyer, and your job is to negotiate deals. And if you get 80 percent of what your client wants, that’s a win. If you’re a litigator, you’re going to be negotiating and if you get 80 percent of what your client wants, that’s a win. But in tax, if you’re 99 percent right, you’re wrong.” Tax is never easy, it’s very technical, and it is a lifelong commitment to learning your craft. That appealed to me. 

BLB: When you began teaching, after years of working in state, federal, and international tax law and planning, you also launched your scholarship focused on employment tax law. What were the issues that prompted this concentration?  

RW: In the first year of teaching, you’re very focused on teaching techniques, but you also have to establish a scholarly agenda. As I do with a lot of things, I just followed my nose. The person who helped me enter the field of teaching told me that I should read one scholarly article a day, every day, about anything that interested me. In doing that, I read a few articles about the federal employment tax system. I had done no employment tax law when I was in practice, but I found there was little scholarship being done in this field, especially as it related to the taxes on the self-employed, which are collected under a dysfunctional set of laws and in need of repair. I stumbled across a gap in the literature that needed to be addressed.  

That resulted in my 2006 article, “Working for Free: It Ought to be Against the (Tax) Law,” published in the Mississippi Law Journal, which explored how corporation owners who also work for the firm have access to the company’s earnings not through compensation, which is subject to employment tax, but through a distribution of profits, which is not. They work for “free,” and the distribution they receive is nothing more than disguised compensation that avoids employment tax. 

BLB: How did you draw congressional attention to your work? 

RW: It was a shot in the dark. I had a bunch of physical reprints of the journal article. So, I developed a mailing list that included all the members of the tax-writing committee and sent the reprints off with a cover letter. A year later, I spotted a footnote citing my article in a report by the Congressional Joint Committee on Taxation.  

BLS: Your 2009 article “The Gap in the Employment Tax Gap,” which was published in the Stanford Law & Policy Review, has also been cited several times over the past decade by the Joint Committee on Taxation and the Congressional Budget Office. What did that article explore?  

RW: Here I discussed the gaps in the official 2007 IRS Tax Gap Report, which focused on underreporting of taxes by the self-employed who are sole proprietors. However, that report made no mention of self-employed persons who operate as corporations, LLCs, and other business entities who can understate their employment tax liabilities in ways that are not reflected in the official tax gap estimates. This is possible because the employment tax laws operate in an inconsistent way across business forms. In this article I explored the defects in the law, estimated the magnitude of lost employment tax revenue, and offered a legislative proposal for reform. 

BLB: What are the current tax law issues you’re thinking about, researching, and presenting on? 

RW: I’ve been focusing on ways to make the employment tax rules easier to administer and less prone to abuse by taxpayers. I have an article called “A Tax Policing Paradox,” which examines the ways this might be accomplished when taxpayers operate a business as an S corporation.  

I have a separate project focusing on taxpayers who are limited partners in a partnership. The IRS has had a string of victories against limited partners in Tax Court, so the issue is very much alive. But I have concerns about whether those victories will translate into a reduction in tax avoidance. So, I’m keeping a close eye on that.    

BLB: How did you follow your nose to start delving into the Jim Crow-era FHA/Pontchartrain Park development that is the basis for your book-in-progress? 

RW: I’d read a report by two economists, one from Duke and the other from the New School, that quantified the amount of wealth that was extracted from Black families in Chicago during the 1940s and ’50s because they didn’t have access to Federal Housing Administration-insured mortgages and had to purchase homes through very predatory arrangements.  

I went down a rabbit hole that led to my article “Homeownership While Black: A Pathway to Plunder, Compliments of Uncle Sam,” which explores the history of the FHA’s all-white lending policy. In the course of working on that, I discovered there were some exceptions to that policy, and the biggest was the community of Pontchartrain Park, located in New Orleans. It happened to be a replica of a neighboring white community built by the same developer.   

Those prefab homes in the Black community, which were built only two to three years after the white community’s homes, cost buyers double the price. So, I’m examining the business aspects and arrangements to try to understand what might be going on. I’ve found that the firm created to build the Black community used a complex capital structure that had to accommodate a number of investors (including prominent philanthropists Edith Rosenwald Stern and Rosa Freeman Keller, the heiress to the Coca-Cola fortune in Louisiana). By contrast, the builder used a wholly owned subsidiary to build the white community. My research will help determine the extent to which these differences explain the disparity in home prices.   

They are very intricate connections, and if I didn't teach business associations and wasn’t a lawyer with tax and business expertise, I don't know if I would appreciate what I'm seeing in reviewing the documents. 

The great news is I just received funding from The Murphy Institute at Tulane University to assemble a team of researchers to go through real estate records and build a database for analysis.  

BLB: Switching gears a bit, you’re also a pianist and come from a musical family. Tell us about that. 

RW: I’m a New Orleans native and both my mother and father were musicians. My dad was an English teacher and assistant band director at my high school. He played trumpet and would occasionally sit in with the band at Preservation Hall. My mom was a piano teacher, and she taught me how to play in the classical style. I eventually branched out to jazz and contemporary. And when I was teaching in San Diego, which is a very welcoming jazz city, I started going to jam sessions at one of the jazz clubs and approached the keyboard player about giving me lessons.  

Then I started jamming with the general counsel at the law school, who was a bass player, and an alumnus who was a drummer, and we ended up playing at alumni events as the Richard Winchester Trio. When we added a sax player (a first-year student), we called ourselves “4L”. I still play; it’s what I do in the evenings instead of watching TV. 

BLB: We also hear you’re a champion baker. What’s your best bake? 

RW: Brioche! Although I love to cook my red beans and rice, people always want the brioche.