INCOME

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...

The paper provides analyses the difference between income taxation system for resident and nonresident taxpayer, in particular the inequality deduction and exemption. The paper emphasizes the different qualification principles for nonresident alien-taxpayer, the treaty benefits for different countries, and the standard deduction. It is a comparative investigation of tax regulations for nonresident aliens in EU countries,...

In this chapter we will discuss some examples of how the tax law treats losses. But first let’s make some introductory comments. There are billions of dollars of losses that taxpayers incur in their businesses, investments and in their personal lives. If an activity rises to the level of a “business” as distinguished from an “investment,”[1] there is generally an unlimited allowance of losses. But, as we shall...

In every era and area of law you find a never-ending battle between two groups of legal thinkers: formalists and functionalists. Each is connected to long-standing and honorable traditions in Anglo-American jurisprudence. The formalists tend toward the law side of those traditions the search for order and certainty and the functionalists tend toward the equity side the search for justice and meaning. All can agree that...

A common trust fund (CTF) is a fund maintained by a bank exclusively for the collective investment of the funds of trust clients. Under section 584 of the code, a CTF pays no tax, but each participant must include its proportionate share of income and losses computed at the CTF level, even if the common trust makes no distributions. Examining the Common Trust Fund bears a resemblence to coming upon a coelacanth, a...

Fernando Daniel de Moura FonsecaPost-graduate degree in Tax Law from Fundação Getúlio Vargas. Accountant. Lawyer. Updated version of the Brazilian national report presented to the 65th Congress of the International Fiscal Association (Paris, 2011). 1. INTRODUCTION The issues related to international double taxation and to the methods of preventing it necessarily relate to the intensification of economic relations...

Under current law, taxpayers can receive cash but not pay tax on it because the cash is considered deferred revenue. When a taxpayer writes an option or sells stock short, for example, the taxpayer receives cash, but the cash is not considered gain or loss until the option is exercised or until the short sale stock is replaced. In accounting, the cash received is not income, but deferred income. Under limited circumstances,...

Abstract How are hourly wages affected by the Earned Income Tax Credit? Two strategies are utilized to determine the relationship between the credit and hourly wages. First, I use variation in state EITC supplements, which magnify the effect of the federal EITC. I find that a 10 percent increase in the generosity of the EITC is associated with a 4 percent fall in the wages of high school dropouts and a 2 percent fall...

Several commentators recently have suggested that the state corporate income tax is dead, or nearly so, and hardly worth keeping. Writing in these pages, Kirk J. Stark has concluded, after an extensive and thoughtful review of the history of the state corporate tax, that “subnational taxation of corporate income is simply untenable.”[1] Stark suggests that Congress should prohibit the states from levying a corporate...

Roger Gordon Laura Kalambokidis Jeffrey Rohaly Joel Slemrod* Amid the academic debate about whether a tax based on consumption or income is superior, it has long been recognized that the U.S. federal tax system is in reality a hybrid of an income and consumption tax, with some elements that do not fit naturally into either system. In recent decades tax law changes that altered the nature of the hybrid were...

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 two proposals in this article have a common theme: Accounting for taxable income should reflect money a taxpayer has kept for his own self-serving uses. A charitable deduction is reasonable when the taxpayer has forfeited resources to others, but not when the taxpayer has consumed resources for self-use. Providing a subsidy by exempting resources that a taxpayer has kept for himself is not a reasonable way to promote...