Tax losses

Lester Snyder
In this chapter we will discuss some examples of how the tax law treats losses. But first let’s make some introductory comments. There are billions of dollars of losses that taxpayers incur in their businesses, investments and in their personal lives. If an activity rises to the level of a “business” as distinguished from an “investment,”[1] there is generally an unlimited allowance of losses. But, as we shall...

Fiscal Policy and Capital Formation in Transition Economies

Grzegorz Kolodko
SUMMARY In the 199Os the transition economies of Eastern Europe and the former Soviet Union have suffered significant recession and persistent imbalances. Over ten years of vast changes GDP has contracted significantly and income inequality increased, too. In several countries post-socialist depression still continues. Whereas in the best example, that is Poland, GDP in 1999 is at about 12O percent of pre-transition...

Distributional Effects of Raising the Social Security Taxable Maximum

Kevin Whitman
As of 2009, Social Security’s Old-Age, Survivors, and Disability Insurance program limits the amount of annual earnings subject to taxation at $106,800, and this value generally increases annually based on changes in the national average wage index. This brief uses Modeling Income in the Near Term (MINT) projections to compare the distributional effects of four options for raising the maximum taxable earnings amount...

A Burden-Neutral Shift from Foreign Tax Creditability to Deductibility?

Kimberly A. Clausing
Daniel Shaviro
Kimberly A. Clausing Daniel Shaviro I. INTRODUCTION As one of the authors has explained, analysis of the issues raised by foreign tax creditability often conflates two distinct margins affecting multinational firms.[1] The first is the marginal incentive to invest abroad, which depends on expected domestic tax burdens with respect to such investment. The domestic tax treatment of foreign tax liabilities is just...

Ten Facts About Fundamental Tax Reform

Edward Mccaffery
The older I get, the less time I seem to have to read, or to pay attention to anything at great length. I presume, or hope, that this is because I am busy, not on account of any biological decline. In any event, I have learned since my first days of talking about tax reform to try to keep things short and simple, perhaps especially in such a complex field. Fundamental tax reform, the subject matter of these hearings,...

Market Bubbles and Wasteful Avoidance: Tax and Regulatory

Michael Powers
Written by: Michael R. Powers, David M. Schizer, Martin Shubik Abstract Although short sales make an important contribution to financial markets, this transaction faces legal constraints that do not govern long positions. In evaluating these constraints, other commentators, who are virtually all economists, have not focused rigorously enough on the precise contours of current law. Some short sale constraints are...

The Effects of the Length of the Tax-loss Carryback Period on Tax Receipts and Corporate Marginal Tax Rates

John Graham
Written by: John R. Graham and Hyunseob Kim Abstract We investigate how the length of the net operating loss carryback period affects corporate liquidity and marginal tax rates. We estimate that extending the carryback period from two to five years, as recently proposed in President Obama’s budget blueprint, would provide $19 ($34) billion of additional liquidity to the corporate sector for 2008 (2009). Our calculations...

Experimental Evidence of Tax Framing – Effects on the Work/Leisure Decision

David Gamage
David Gamage Andrew Hayashi (Correspondence Author) Davis Polk & Wardwell LLP Brent K. Nakamura, University of California, Berkeley, Jurisprudence & Social Policy Program Keywords: Experiment, Framing, Labor Supply, Taxation Abstract The choice between a set of alternatives often depends on how those alternatives are described, as well as their actual economic costs and benefits. We report results...

Thoughts on the Future Of the State Corporate Income Tax

Michael Mcintyre
Several commentators recently have suggested that the state corporate income tax is dead, or nearly so, and hardly worth keeping. Writing in these pages, Kirk J. Stark has concluded, after an extensive and thoughtful review of the history of the state corporate tax, that “subnational taxation of corporate income is simply untenable.”[1] Stark suggests that Congress should prohibit the states from levying a corporate...

Massachusetts Zappers – Collecting the Sales Tax that has already Been Paid

Richard Ainsworth
No other New England state is as vulnerable to Zappers as is the State of Massachusetts.[1] Zappers and related software programming, Phantom-ware, facilitate an old tax fraud - skimming cash receipts. In this instance skimming is performed with modern electronic cash registers (ECRs). Zappers are a global revenue problem, but to the best of this author's knowledge they have not been uncovered in Massachusetts. A...
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