The Unhappy Marriage of Law and Equity in Joint Return Liability

It is no accident that Justice Holmes penned those words in a tax case. Of all the corners in all the laws governing citizen interaction with government, tax laws contain some of the squarest. Today’s column discusses what happens when Congress attempts to smooth out the sharp corners of the tax code with notions of equity, but does so with an inadequate understanding of, or appreciation for, the problems of tax administration....

Theory and Practice in Tax Administration

Good articles deserve to be read. Great ones deserve to be re-read. What Mortimer Caplin wrote some forty-five years ago deserves our renewed attention for the value it adds to the theory of tax administration. The insights and observations of a subtle intellect about his experience as Commissioner of the Internal Revenue Service (―IRS‖ or ―Service‖) help keep theory properly connected to the context in which...

Special Report: Global Tax Audit and Controversy Risk Management

Introduction We have maintained in our publications and workshops over the years that managing tax risk is one of the greatest challenges for tax departments around the world (creating the opportunities to build lasting world class relationships with Revenue Services), starting with the verification audit through to the resolution of tax controversies. A recent big 4 survey supports this contention. 541 companies from...

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

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...

Tax Shelters and the Code: Navigating Between Text and Intent

Written by: Steven A. Dean and Lawrence M. Solan I. INTRODUCTION Tax shelters raise difficult problems of statutory interpretation. In her interesting article, Of Lenity, Chevron, and KPMG,[1] Kristin Hickman explores one of them: the recent tendency of courts to apply the rule of lenity in civil cases, potentially leading to a narrow interpretation of the Internal Revenue Code (Code) that would undermine efforts...

The Rise of the OECD as Informal; World Tax Organization; Through National Responses to E-commerce Tax Challenges

ABSTRACT This paper assesses national and international responses to tax challenges presented by cross-border electronic commerce. Ten years after these challenges were first identified, a survey of national government reactions shows that many countries have not passed any significant tax legislation or administrative guidance with respect to the taxation of global e-commerce. This lack of action at the national level...

“The Unequal Taxation of Equals” in a Consumption Tax World?

A. Overview of Consumption Taxes 1. A Cash-Flow Consumption-Type Tax: Integrated Into the Current IncomeTax An income tax purportedly taxes savings twice: once when the money is earned, and again when the amount saved earns interest in later years. This has been shown to discriminate against those who postpone their personal consumption until future years.[1 ] One way to resolve this is by changing our federal income...

Three Essays on Tax Salience: Market Salience and Political Salience

Written by: David Gamage and Darien Shanske Should the U.S. introduce a value added tax? How should we manage budget deficits? Should we abolish the alternative minimum tax? Why does the U.S. conduct most of its social- welfare policy through tax expenditures? Should we automate and simplify income-tax filing?  Tax salience is the key to these and other important debates. The behavioral economics revolution has...

Globalization, Multinationals and Tax Base Allocation: Advance Pricing Agreements as Shifts in International Taxation?

Abstract: This paper elaborates on the emergence of so-called Advance Pricing Agreements (APA) in international taxation and corresponding APA programs in individual countries. It refers to how globalizing business processes trigger governance change on the nation state level regarding the identification and allocation of the tax base of multinational companies. The introduction of APA programs and the generation of APAs...

The International Income Taxation of Portfolio Debt in the Presence of Bi-directional Capital Flows

Written by : Ewen McCann and Tim Edgar Abstract - A country’s net flow of capital consists of simultaneously occurring imports and exports. Because a tax on the income from capital imports affects the quantity of capital exports and vice versa, tax policies toward inbound and outbound capital should be jointly formulated in order to avoid distortion of these bi-directional flows. For a small open economy, welfare-...

The Deduction of Interest Payments in an Ideal Tax on Realized Business Profits

Abstract: The realization rule, which allows taxpayers to defer tax on certain accrued gains and prevents taxpayers from deducting certain unrealized losses, had a deduction component. That component requires thatthe deferred income be quarantined and that any deductions relating to that deferred income be capitalized or otherwise deferred until the related income becomes taxable. For the most part, the need for capitalization...

Carbon tax heuristics and politics: the case of the gasoline tax

Abstract Economists are beginning to form a consensus that the most effective and cost-effective way to reduce global greenhouse gas emissions is through a carbon tax. The insight of economists and other policy analysts is that in the greenhouse gas context, the design of cap-and-trade programs creates so many opportunities for rent-seeking that they may not be very cost-effective, and may not reduce greenhouse gas...
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