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VAT Fraud as a Policy Stimulus – Is the US Watching? VAT Withholding, RTVAT, and the Mittler Model

Richard Ainsworth
The EU VAT, like most mature tax regimes, is resistant to change. Fraudsters are testing this resilience today, and this may not be such a bad thing for policy-makers. Significant challenges produce significant reforms proposals.[1] If the US is seriously considering a VAT it would do well to observe this dynamic, avoid the known pitfalls, and work to advance the policy debate before it inherits a problem. The most...
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Are Tax Havens Good Neighbors? An LDC Perspective

Luisa Blanco
Written by: Luisa Blanco[*] and Cynthia L. Rogers Abstract Tax competition and spillover models offer ambiguous predictions of tax haven impacts on non- tax havens. The implications of tax havens for less developed countries (LDCs), in particular, are not well understood and are little studied. This paper investigates the impact of tax havens on foreign direct investment (FDI) in non-tax haven LDCs. We investigate...
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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...
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The Missing Links in Tax Reform

Edward Mccaffery
A funny thing happened on the way to fundamental tax reform: Nothing. Just a few short years ago, it looked as if we might have another great American tax revolt, akin to the one that started this country over two hundred years ago. Ronald Reagan had gotten the modern bandwagon started, first in California in the 1970s and later, from the White House, in the 1980s.[1] Politicians—like football coaches, investment...
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Is the Value Added Tax Naturally Progressive?

Glenn P. Jenkins
Written by : Glenn P. Jenkins, Hatice Jenkins, Chun-Yan Kuo 1.0 Introduction A broad based value added tax on consumption is generally considered to be a regressive tax. The hypothesis is that because the poorer households spend a greater proportion of their income on consumption they are also likely to pay a higher average rate of tax as compared to higher income households. This may sound reasonable, however,...
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More Cooperation, Less Uniformity: Tax Deharmonization and The Future of the International Tax Regime

Steve Dean
Efforts to foster improved international tax cooperation have become preoccupied with tax harmonization. Deharmonization offers the possibility of harmony without uniformity. By exploring two examples of tax deharmonization in practice and considering the origins and limitations of tax harmonization, this Article brings the traditional emphasis on harmonization into question. It then makes the case that deharmonization—cooperation...
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Cross-Border Outsourcing: U.S. International Tax Pitfalls, Pratfalls, And Opportunities

Anthony Infanti
I. INTRODUCTION Broadly defined, “outsourcing” occurs when a business contracts with a third party to provide goods or perform services that traditionally have been provided or performed in-house.[1] Faced with increasing global competition, businesses have come to look to outsourcing as a means of gaining a comparative advantage over their competitors.[2] Outsourcing is thought to benefit a business by allowing...
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The value of tax shields is the difference of two present values with different risk

Pablo Fernandez
ABSTRACT We show that the value of tax shields is the difference between the present values of two different cash flows with their own risk: the present value of taxes for the unlevered company and the present value of taxes for the levered company. For perpetuities without costs of leverage, the value of tax shields is equal to the tax rate times the value of debt. For any company, we claim that the value of...
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The new “innocent spouse” rules: an update on “equitable” relief

Burton J. Haynes
When we left our friends, Rhett and Scarlett (in the article which appeared in the previous issue of The Free State Accountant), they were contemplating the relief Scarlett could obtain under the new innocent spouse rules enacted by the IRS Restructuring and Reform Act of 1998. In the months since that article was published, there have been several important pronouncements from the IRS interpreting and implementing the...
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Containing Tax Avoidance: Anti-Avoidance Strategies

Chris Evans
1 Introduction Traditionally the topic of tax avoidance, or how to contain it, has not been a central focus of the public finance literature.[2] Indeed, the Fifth Edition of Public Finance in Theory and Practice[3] does not mention tax avoidance at all and only makes the briefest mention of tax shelters in the contexts of interest quarantining and the US alternative minimum tax. This omission is slightly surprising...
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