The Failure of Adversarial Process in the Administrative State

INTRODUCTION “Distrust of the bureaucracy is surely one reason for the clamor for adversary proceedings in the United States.”[1] In a series of hearings in 1997 and 1998, Congress heard allegations that the Internal Revenue Service (IRS or “Service”) abused taxpayers during the process of collecting taxes.[2] The resulting distrust of the tax bureaucracy led Congress to create a special adversary proceeding...

California Zappers: a Proposal for California’s Commission on the 21st Century Economy

On December 11, 2008 California Governor Arnold Schwarzenegger and legislative leaders announced appointments to the Commission on the 21stCentury Economy. The mandate is to propose ways to modernize the California revenue system by April 15, 2009. The Governor is concerned with the “feast-or-famine” budget cycles, and Senate President pro Tempore Darrell Steinberg emphasized that the Commission is expected to provide...

Is There a Gender Gap in Fiscal Political Preferences?

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...

Risky Tax Shields and Risky Debt: An Exploratory Study

Abstract This paper identifies three sources of risk for tax shields (TS): two of them associated with debt risk and one associated to operating risk. A set of conditions for defining risky debt associated to cash flow and not to accounting earnings is presented. The paper shows that realization of tax shields for finite cash flows in any period of time t are correlated with Earnings before Interest and Taxes and are...

The Effects of Fiscal Institutions on Public Finance: A Survey of the Empirical Evidence

Abstract This paper surveys the empirical research on fiscal institutions of the last three decades. The main results are: (i) Constitutional or statutory fiscal limitations have in most cases proved to be effective in cutting down public expenditure, revenue, and debt. (ii) Budgetary procedures matter as well. They might be less effective than constitutional or statutory rules, but in a situation where it is impossible...

Heuristics and Biases in Thinking About Tax

Written by: Edward J. McCaffery(#) and Jonathan Baron (t) Abstract The principal findings of behavioral economics and cognitive psychology over the past several decades have been to show that human beings deviate from ideal precepts of rationality in many settings, showing inconsistent judgment in the face of framing and other formal manipulations of the presentation of problems. This paper summarizes the findings...

Does The Tax Law Discriminate Against the Majority of American Children: the Downside of Our Progressive Rate Structure and Unbalanced Incentives For Higher Education?

Abstract Our graduate income tax structure provides an incentive to shift income to lower-bracket family members. However, some parents have much more latitude to shift income to their children than do others. Income derived from services and private business-by far the majority of American income -is less favored than income derived from publicly traded securities. The rationale given for this discrimination is that...

Impact of the New Anti-Tax Shelter Rules on Non-Tax Shelter Lawyers and Accountants

Written by: Steven R. Schneider, Steven R. Dixon, Miller & Chevalier Chartered, Mona L. Hymel 1.01 Introduction and Overview. After many proposed and temporary regulations and recent legislative changes, major portions of the new anti-tax shelter rules are now final.[2] Although targeted at abuses, the regime is broad and can unexpectedly impact lawyers and accountants involved in common business transactions....

Good Hybrids/Bad Hybrids

In the second article I published as an academic, in 1992, "Tax Policy Under Hybrid Income - Consumption Tax," I wrote that: the tax policy literature has spent decades, and by some measures centuries, discussing the relative merits of an income versus a consumption tax. It may be time to stop. We should accept the fact of a hybrid income-consumption tax and begin to figure out how best to structure it.[1] My ears...

Taxpayer’s Constitutional Rights: a South African Perspective

1. INTRODUCTION The content of this paper is based on research concluded by the author of textbooks and case law, as well as from practical experience gained in conflict situations and discussions with the South African Revenue Service (“SARS”). The bibliography below lists the main textbooks researched in the preparation of this manual. Reference has also been made throughout this manual to articles and case...

The Federal Definition of Tax Partnership

I. INTRODUCTION “When an entity must be classified for purposes of a Federal income tax statute, policy considerations of Federal income tax law should govern that classification . . . .”[1] Thus spoke the Tax Court, honoring federal income tax policy with its pen, but remaining far from it in application.[2] In fact, although the federal definition of tax[3] partnership has been at issue in over 150 statutes,...

Tax Competition, Foreign Direct Investments and Growth: Using the Tax System to Promote Developing Countries

I. INTRODUCTION AND BACKGROUND INFORMATION The world population is approximately six billion people. 1.2 billion, or one-fifth, are rich while 4.8 billion, or four-fifths, are poor.[1]  The world is more unequal today than at any time in world history. (2)  Only 240 years ago, at the beginning of the industrial revolution, most everybody was poor. Author Lant Pritchett explains that very poor nations today are just...
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