Tax on Insurance Buildup

Calvin Johnson
Andrew Pike Eric A. Lustig Life insurance contracts often combine a savings or investment element with pure insurance protection that covers the risk of death during the year. Current law will tax the buildup in the value of a ‘‘life insurance contract’’ only if the policy is surrendered for its cash value during life. If the contract stays within the limits of a qualified insurance contract, the investment...

Informational Hearing on the Tax Recommendations of the Commission on the 21st Century Economy

David Gamage
Mr. Chairman and Members of the Committee, it is my great pleasure to appear before you to discuss California's tax system. I would like to emphasize three points in my remarks: First, please do not throw out the baby with the bathwater! The Commission's report contains a number of sound, non-controversial, proposals that should be enacted without delay. Second, bi-partisan tax reform proposals should start with...

UBIT to the Defense! ESOPs and Government Entities

Calvin Johnson
Calvin H. Johnson Ellen P. Aprill The unrelated trade or unrelated business income tax imposes tax on the unrelated business income of tax exempt organizations, including charities and pension plans. The general principle is that tax is imposed on business income no matter what its use or destination.UBIT defends the tax base by preventing the shift of business assets from taxable corporations to exempt entities....

An Analysis of Budget Offset Requirements for Tax Expenditures

Dhammika Dharmapala
Abstract Budget rules enacted by Congress in the 1990’s (and currently still in force) established pay-as- you-go (PAYGO) rules requiring that the revenue loss from any new or expanded tax expenditure provision be offset in the same fiscal year by legislation raising an equivalent amount of extra revenue. This note extends Dharmapala’s (1999) model of the political economy of tax expenditures to incorporate the...

Developing an International Tax Policy Strategy for NAFTA Countries

Arthur J. Cockfield
On January 1, 1994, Canada, the United States, and Mexico formed the North American Free Trade Agreement to promote their economic interests by lowering barriers to international trade and investment. A concern exists that national tax differences harm or inhibit cross-border investment. Yet NAFTA is almost silent regarding tax measures. For the most part, the tax treatment of cross-border trade and investment flows...

Comments on IASB Income Tax Accounting

Daniel N. Erasmus II
Exposure Draft ED/2009/02 INTRODUCTION The Exposure Draft dealing with Income Tax was published for public comment on 31 March 2009 by the International Accounting Standard Board ("the Board"). This document contains comments on question 7 and 16 as set out in the Exposure Draft. QUESTION 7 - MEASUREMENT OF CURRENT AND DEFERRED TAX ASSETS AND LIABILITIES 1. The proposed standard retains the basic approach...

Accurate and Honest Tax Accounting for Oil and Gas

Calvin Johnson
Tax accounting for the oil and gas industry does not describe the economic income from the investment. Indeed, for a broad range of reasonable assumptions, oil and gas accounting delivers anti-tax or subsidies to profitable investments. The combination of four important tax preferences generates a subsidy that is a negative 42 percent of real income. The four preferences are the expensing of intangible drilling costs,...

Fiscal Policy Report Card on America’s Governors: 2010

Chris Edwards
Executive Summary State governments have had to make tough budget choices in recent years. Tax revenues have stagnated as a result of the poor economy, and that has prompted governors to take a variety of fiscal actions to close large budget gaps. Some governors have cut spending to balance their budgets, while others have pursued large tax increases. That is the backdrop to this 10th biennial fis- cal report card...

No Deductions for Tax Planning And Controversy Costs

Calvin Johnson
Tax planning and tax litigation are too profitable for the taxpayer. The tax accounting for tax planning and controversy work allows an exemption for the reduction in tax achieved by the costs and also generally allows a deduction for the costs of the work. The mismatch of the exemption of the benefit and deduction of the costs gives a negative tax or subsidy. Costs that would routinely be profitable under neutral tax...

Tax Fraud in The Sales Tax: Zappers – What Are They? How Can Puerto Rico Block Them?

Richard Ainsworth
The Sales and Use Tax is an essential part of Puerto Rico's revenue profile. Effective only recently (November 15, 2006) the Impuesto a las Ventas y Uso (IVU)[1] was expected to raise between $2.3 and $1.05 billion annually,[2] and has already become the Commonwealth's fourth largest revenue source.[3] Actual revenue results for 2007-2008 came in at $1.1 billion,[4] which admittedly is closer to the low end than the high...
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