The value of tax shields and the risk of the net increase of debt

Pablo Fernandez
Abstract The value of tax shields depends upon the nature of the stochastic process of the net increase of debt, and does not depend upon the nature of the stochastic process of the free cash flow. The value of tax shields in a world with no leverage cost is the tax rate times the debt plus the tax rate times the present value of the net increases of debt. This expression is the difference between the present values...

Enlisting the Tax Bar

David Schizer
Abstract Tax shelters and aggressive planning derive in part from a structural imbalance in our tax system that has not been adequately explored: In important respects, the private tax bar outmatches their counterparts in government. Although a strong policy case can be made for remedying this mismatch, this Article emphasizes two institutional barriers that complicate any solution, rooted in the political economy...

Does Fiscal Policy Reduce Unemployment? Evidence from Pork-Barrel Spending

Andrew Leigh
Christine Neill
Andrew Leigh Christine Neill Abstract Studies of the effect of government spending on unemployment are potentially confounded by reverse causality. To address the endogeneity problem, we exploit variation in a pork- barrel road-building program, and find that higher government expenditure on road-building substantially reduces local unemployment. JEL Codes: E24, E62, H30, H54, Keywords: fiscal policy,...


Calvin Johnson
Under current law the combination of tax preferences for timber means that timber investments are subject to less than zero tax. Tax accounting should describe the economic income from timber. This proposal would treat timber as an ordinary asset, require the capitalization of all costs incurred before harvest, and allow the capitalized costs to be recovered only under cost depletion. It would also tax and capitalize...

The Economics of the Estate Tax: An Update

Daniel Miller
Executive Summary This analysis examines the arguments for and against the federal estate tax and concludes that the estate tax generates costs to taxpayers, the economy, and the environment that far exceed any potential benefits that it might arguably produce. • The existence of the estate tax has reduced the stock of capital in the economy by approximately $497 billion, or 3.2 percent. • The estate tax...

Fixing the Constitutional Absurdity of the Apportionment of Direct Tax

Calvin Johnson
Fixing the Constitutional Absurdity of the Apportionment of Direct Tax argues that the Constitutional requirement that "direct tax" be apportioned among the states according to population should never be used to make any federal tax impossible. "Direct tax" is a word like "trash" defined by what you are going to do with it, and "direct tax" originally meant "apportionable tax." Before the Constitution, "direct tax" included...

Behavioral Dimensions of Tax Reform

Edward Mccaffery
Abstract These are powerpoint slides from a presentation at a joint UCLA-Tax Policy Center Conference on Tax Policy in the Obama Era. The basic insight is that it will be difficult to raise significant revenue through the current tax system. Behavioral perspectives suggest that a series of small (or large) cuts, aiming towards a flattened rate structure – as we have seen in the Ronald Reagan and George W. Bush...

Moonshine to Motorfuel: Tax Incentives For Fuel Ethanol

Mona Hymel
Written by Roberta F. Mann and Mona L. Hymel ABSTRACT Biofuels have been embraced by supporters from President George W. Bush to the Natural Resources Defense Council. Before 1930, the U.S. Treasury focused on shutting down small alcohol producers. After 1978, U.S. energy policy sought to encourage ethanol production to reduce dependence on foreign oil. Federal and state incentives have been credited with increasing...

Tax Fraud Investigations – A Procedural Road Map – Part I

Burton J. Haynes
Joseph M. Jones I. Introduction An IRS fraud investigation is a harrowing experience, not only for the corporate officers, directors and employees who are the subject of the investigation, but for the corporation's legal advisors as well. The process many begin innocuously with a routine civil tax examination, or with the jolting arrival of a grand jury subpoena. The investigators may not know exactly what (or who)...

Is There a Gender Gap in Fiscal Political Preferences?

Edward Mccaffery
Written by: R. Michael Alvarez and Edward J. McCaffery Abstract This paper examines the relationship between attitudes on potential uses of the budget surplus and gender. Survey results show relatively weak support overall for using a projected surplus to reduce taxes, with respondents much likelier to prefer increased social spending on education or social security. There is a significant gender gap with men being...
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