Globalization, the X-Tax, and the Gatt
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Getting Acquainted with VAT (C) Tax Analysts 2011
Introduction: Getting Acquainted With VAT (C) Tax Analysts 2011. All rights reserved. does not claim copyright in any public domain or third party content. By Martin A. Sullivan Martin A. Sullivan is a contributing editor to Tax Analysts. Until recently, most talk about a value added tax in the United States was an academic exercise. Policy experts kept telling anyone who would listen that we could boost our competitive- ness if some form of a VAT was used to replace all, or at least the worst parts, of our clunky income tax. But there was no pressing need for a VAT and no political incentive to undertake the arduous task of orchestrating a major tax reform. But times are changing. Between the 2007 and 2010 fiscal years, the national debt increased from 36 percent to 62 percent of gross national product. And matters are only getting worse. America is relentlessly moving toward the edge of a fiscal abyss. In Wash- ington, while our leaders may talk tough, they are not taking action. To avoid upsetting voters, they are careful not to even hint at spending cuts or tax increases of the size needed to make a real dent in the problem. With no limit on the national credit card, the daily push and pull of politics continues unhindered by the impending crisis. Our system of checks and balances and the usual political gridlock are partly to blame. Also part of the mix is our national mental block about the federal debt. The tough choices that must be made are outside the scope of current political discourse. -
Business Taxpayer Burden Survey Internal Revenue Service
Business Taxpayer Burden Survey Internal Revenue Service sampleonly For use Your experience matters to us. BTB <Wave#> <WesID> IRS Business Taxpayer Burden Survey The purpose of this survey is to provide Congress and the President with accurate estimates of the costs incurred by business taxpayers in complying with federal tax rules and regulations as well as to inform tax administrators and policy makers regarding opportunities to reduce and otherwise manage these costs. Please be assured that you will not be asked about the income or other financial details of your business’ tax return. This questionnaire relates to the activities associated with the preparation and filing of your 2009 federal income tax return and any other tax returns (i.e., employment, excise, information returns, state and local, etc.) filed for the same period. This includes any filings completed in the 12 months leading up to the filing of your business’ 2009 federal income tax return. The individual most responsible for maintaining the financial records for your business or making the financial and tax-related decisions for your business should complete this questionnaire. You may need to consult with others in your organization to complete the survey and we encourage you to do so. This survey includes questions regarding the following content areas: Tax Preparation Methods and Activities Tax-related Recordkeeping Gathering Materials, Learning About Tax Law, and Using IRS Taxpayer Services Tax Form Completion Tax Department Personnel and Budget Time Associated with Tax Compliance Allocation of Time Burden Across Tax Compliance Activities Allocation of Time Burden Across Type of Employee Fees Associated with Tax Compliance Demographics Please be assured that your responsessample will be used for research and aggregate reporting purposes only and will not be used for other non-statistical or non-researchonly purposes such as direct enforcement activities. -
Consumption Taxes
A conversation with Alan D. Viard on March 25th, 2014 Participants • Alan D. Viard – Resident Scholar, American Enterprise Institute • Alexander Berger – Senior Research Analyst, GiveWell Note: This set of notes was compiled by GiveWell and gives an overview of the major points made by Dr. Viard. Summary GiveWell spoke with Alan D. Viard, Resident Scholar at the American Enterprise Institute (AEI), about fundamental tax reform, particularly the benefits and drawbacks of various types of consumption taxes. Consumption taxes A consumption tax is a tax on spending as opposed to income. Consumption taxation is theoretical appealing because, unlike the income tax, it does not disincentivize investment and saving. Under an income tax, both invested money and the return on invested money are taxed, meaning that income that is invested is ultimately taxed more heavily than income spent immediately. By taxing money when it is spent, a consumption tax avoids this problem and encourages greater capital growth. Dynamic simulation models suggest that a switch to a consumption tax might increase overall economic output by several percentage points in the long run. Several types of consumption tax have been proposed. A value-added tax (VAT), somewhat like a sales tax, uses a flat tax structure. The X tax is a progressive consumption tax that taxes businesses on value-added minus wages and individuals on wages. The personal expenditure tax (PET) is a progressive tax on household expenditures which eliminates business taxes altogether. Value-added tax (VAT) A VAT is a tax on the value added to a product at each stage of its manufacture and on its final sale to the consumer. -
Rethinking Tax: the Shift to Indirect Tax
Rethinking tax: The shift to indirect tax The global tax landscape is going through a period of fundamental change. Governments are now rethinking how taxes are levied. Changes have been triggered by the rapid spread of technology, new supply chains, debt pressures, and an increased scrutiny of multinational tax practices. More than ever, tax is a top priority for businesses, as sweeping changes, brought in through the Organisation for Economic Cooperation and Development’s (OECD’s) Base Erosion and Profit Shifting (BEPS) recommendations, transform the way they operate. Whilst corporate tax avoidance continues to grab system. Just next door, Bangladesh has plans to headlines, some of the biggest reforms are in fact implement a new VAT in July. The Middle East occurring within indirect tax. This year, two of are also expecting momentous changes. In a move the world’s most populous countries – China and to generate additional revenue and diversify the India – are expected to transform their indirect tax economy, the Gulf Cooperation Council (GCC) systems. China is set to complete the final stage countries – Saudi Arabia, Kuwait, the United Arab of its Value Added Tax (VAT) reform, whilst Emirates, Qatar, Bahrain, and Oman – are expected India is expected to introduce its long-awaited to levy VAT from 2018. comprehensive Goods and Services Tax (GST) Rethinking tax: The shift to indirect tax Countries transforming their indirect tax regimes or introducing VAT/GST China India Bangladesh Puerto Rico Kuwait Bahrain Qatar UAE Saudi Arabia Oman These upcoming changes are all off the back of The shift to indirect tax will transform the way Malaysia’s successful GST regime introduction businesses operate within these countries. -
The Theory of International Tax Competition and Coordination
CHAPTER 5 The Theory of International Tax Competition and Coordination Michael Keen* and Kai A. Konrad†,‡ *International Monetary Fund, Fiscal Affairs Department,Washington DC 20431, USA †Max Planck Institute for Tax Law and Public Finance, Marstallplatz 1, 80539 Munich, Germany ‡Social Science Research Center Berlin, Germany Contents 1. Introduction 258 2. Uncoordinated Actions 262 2.1. Workhorse Models 263 2.1.1. The Zodrow, Mieszkowski, and Wilson (ZMW) Model 263 2.1.2. The Kanbur-Keen (KK) Model 275 2.2. Sequential Decision Making 278 2.3. Pure Profits and International Portfolio Diversification 282 2.4. Tax Competition with Multiple Instruments 284 2.5. Vertical Externalities and the Strategic Role of Internal Governance Structure 285 3. Coordination 288 3.1. Asymmetries and the Limits of Harmonization 289 3.2. Minimum Tax Rates 289 3.3. Coordination Among a Subset of Countries 293 3.4. Coordination Across a Subset of Instruments 295 3.5. Dynamic Aspects 296 3.5.1. Infinitely Repeated Interaction 296 3.5.2. Endogenous Savings and Time Consistent Taxation 298 3.5.3. Stock Effects and Agglomeration 302 4. Broadening the Perspective 303 4.1. Bidding for Firms 303 4.2. Preferential Regimes 305 4.3. Information Exchange and Implementation of the Residence Principle 308 4.4. Tax Havens 311 4.4.1. Which Countries Become Tax Havens? 311 4.4.2. Are Tax Havens Good or Bad? 312 4.4.3. Closing Down Tax Havens 314 4.5. Formula Apportionment 315 4.6. Political Economy and Agency Issues 318 4.6.1. Tax Competition and Leviathan 318 4.6.2. -
CPA's Guide to Benefit Plans for Small Business
University of Mississippi eGrove American Institute of Certified Public Guides, Handbooks and Manuals Accountants (AICPA) Historical Collection 1999 CPA's guide to benefit plans for small business James R. Hamill Follow this and additional works at: https://egrove.olemiss.edu/aicpa_guides Part of the Accounting Commons, and the Taxation Commons A CPA’s Guide to Benefit Plans for Small Business James R. Hamil, CPA, Ph.D. A CPA’s Guide to Benefit Plans for Small Business James R. Hamil, CPA, Ph.D. NOTICE TO READERS A CPA's Guide to Benefit Plans for Small Business does not represent an official position of the American Institute of Certified Public Accountants, and it is distributed with the understanding that the author and publisher are nor rendering legal, accounting or other professional services in this publication. If legal advice or other expert assistance is required, the services of a competent professional should be sought. Copyright © 1999 by American Institute of Certified Public Accountants, Inc., New York, NY 10036-8775 All rights reserved. For information about permission to copy any part of this work for redistribution or for inclusion in another document or manuscript, please call the AICPA Copyright Permissions Hotline at 201-938-3245. A Permission Request Form for emailing requests is available at www.aicpa.org by clicking on the copyright notice on any page. Otherwise, requests should be written and mailed to the Permissions Department, AICPA, Harborside Financial Center, 201 Plaza Three, Jersey City, NJ 07311-3881. 1234567890PP 99 ISBN 0-87051-255-2 FOREWORD This book covers the full range of popular benefit and welfare plans currently used by closely held businesses to assemble attractive, tax-wise employee compensation packages. -
Nber Working Paper Series Inflation and Taxation With
NBER WORKING PAPER SERIES INFLATION AND TAXATION WITH OPTIMIZING GOVERNMENTS James M. Poterba Julio J. Rotemberg Working Paper No. 2567 NATIONAL BUREAU OF ECONOMIC RESEARCH 1050 Massachusetts Avenue Cambridge, MA 02138 April 1988 We are grateful to Barry Perlstein for research assistance, to Greg Mankiw, Lawrence Surmoers, members of the NBER Taxation Group, and especially David Rosier for helpful comments, and to the National Science Foundation for financial support. The research reported here is part of the NBERs research programs in Economic Fluctuations and Taxation. Support from The Lynde and Harry Bradley Foundation is gratefully acknowledged. NBER 1orking Paper #2567 April 1988 INFlATION AND TAXATION WITH OPTIMIZING GOVERNMENTS ABSTRACT This paper extends and evaluates previous work on the positive theory of inflation. We examine the behavior of governments concerned solely with minimizing the deadweight loss from raising revenue through inflation and tax finance. We show that both governments that can commit to future policy actions, as well as those that cannot precommit, will choose a positive contemporaneous association between inflation and the level of tax burdens. We examine the empirical validity of this prediction using data from Britain, France, Germany, Japan, and the United States, Inflation and tax rates are as likely to be negatively as positively correlated, so the results cast doubt on the empirical relevance of simple models in which governments with time-invariant tastes choose monetary policy to equate the marginal deadweight burdens of inflation and taxes. James N. Poterba Julio Rotemberg Department of Economics Department of Applied Economics MIT, E52-350 MIT Sloan School, E52-432 Cambrige MA 02139 Cambridge, MA 02139 (617) 253-6673 (617) 253-8956 or its constraint either by printing money A government can satisfy budget inflation method of finance has efficiency costs. -
WHEN AMERICAN SMALL BUSINESS HIT the JACKPOT: TAXES, POLITICS and the HISTORY of ORGANIZATIONAL CHOICE in the 1950S
WHEN AMERICAN SMALL BUSINESS HIT THE JACKPOT: TAXES, POLITICS AND THE HISTORY OF ORGANIZATIONAL CHOICE IN THE 1950s Mirit Eyal-Cohen* When I came to study the income tax problems of the small business man, I had a feeling I had looked at all the ills and diseases of the tax law. —Charles T. Akre, Nebraska Tax Institute, 19431 INTRODUCTION While many political developments affected American small businesses during the twentieth century, the enactment of Subchapter S of the Internal Revenue Code (Code) was of particular significance.2 Under Subchapter S, a small business corporation could elect to be treated as a partnership and have its shareholders taxed at the end of each year on their tax return in a pass- through manner.3 The elimination of double taxation for the small business corporation resulted in immediate tax savings for this new hybrid entity.4 Although various integration proposals over the years have suggested exempting taxes on dividends,5 or creating a system to credit individuals for * S.J.D. Candidate, University of California, Los Angeles. I would like to thank Julie Makinen, Steven Bank, Allison Christians, Naomi Lamoreaux, Eric Zolt, and the participants of the 2008 McGill Tax Workshop for their insightful comments on drafts of this paper. I am especially grateful to my loving father Yossi Cohen, a second-generation small businessman, whose daily experience instigated me to study the history of small business. 1. Charles T. Akre, Federal Income Tax Problems of the Small Business Man, 22 NEB. L. REV. 252, 252 (1943). 2. “One of the most far-reaching and important changes in the Internal Revenue Code effected by this act was the addition of Subchapter S—Election of Certain Small Business Corporations as to Taxable Status.” Willard D. -
Trade Restrictions and Incentives to Tax Pollution Emissions (Preliminary Notes)
Trade Restrictions and Incentives to Tax Pollution Emissions (Preliminary notes) August 2010 Nori Tarui1, Morihiro Yomogida2, Ying Yao 1 Abstract This paper studies the effect of a trade restriction on an incentive for a trade partner to tax the emission of greenhouse gases. We are motivated by the recent debate on border tax adjustments in climate change policies, i.e., whether or not developed economies such as EU and US could use trade measures to encourage developing economies such as China and India to reduce the emission of greenhouse gases. We consider a partial equilibrium model with two countries, in which production emits greenhouse gases that generate a cross-border externality. With this model, we examine how an import tariff affects an incentive for an exporting country's government to choose a tax on the emission of greenhouse gases. We show that, in a case of noncooperative optimal policies, an import tariff would induce the exporting country to choose a lower emission tax as compared to a case in which a tariff is banned for the importing country. This result suggests that import restrictions could not encourage other countries to adopt more stringent regulation on the environment. 1Department of Economics, University of Hawaii. 2Department of Economics, Sophia University. - 1 - 1 Introduction Climate change and the discussion of mitigation policies in developing countries have renewed policymakers’ and researchers’ interests in the effects of border-tax adjustments (BTAs) on greenhouse gas (GHG) emissions and welfare among of trading countries. BTA, as discussed in US House and Senate bills, is proposed to encourage non-Annex-I countries such as China, India, and Brazil to adopt domestic GHG reduction policies, where GHG emissions are expected to increase as their economies grow into the future. -
Tax Penalties and Tax Compliance
Georgetown University Law Center Scholarship @ GEORGETOWN LAW 2009 Tax Penalties and Tax Compliance Michael Doran [email protected] This paper can be downloaded free of charge from: https://scholarship.law.georgetown.edu/facpub/915 http://ssrn.com/abstract=1314401 46 Harv. J. on Legis. 111-161 (2009) This open-access article is brought to you by the Georgetown Law Library. Posted with permission of the author. Follow this and additional works at: https://scholarship.law.georgetown.edu/facpub Part of the Taxation-Federal Commons, and the Tax Law Commons ARTICLE TAX PENALTIES AND TAX COMPLIANCE MICHAEL D ORAN* This Article examines the relationship between tax penalties and tax compliance. Conventional accounts, drawing from deterrence theory and norms theory, as- sume that the relationship is purely instrumental—that the function of tax penal- ties is solely to promote tax compliance. This Article identifies another aspect of the relationship that generally has been overlooked by the existing literature: the function of tax penalties in defining tax compliance. Tax penalties determine the standards of conduct that satisfy a taxpayer’s obligations to the government; they distinguish compliant taxpayers from non-compliant taxpayers. This Article argues that tax compliance in a self-assessment system should require the tax- payer to report her tax liabilities only on the basis of legal positions that she reasonably and in good faith believes to be correct. But the accuracy penalties provided under current law set much lower standards of conduct. In the case of a non-abusive transaction, current law allows the taxpayer to base her self- assessment on a position having as little as a one-in-five chance in prevailing. -
Group Disability Tax
Group disability tax An overview and resource handbook for employers and their HR professionals MK-1984 (6-10) Contents: Unum: Your benefits partner 3 What tax rules apply? At Unum, we understand that employers design their benefit plans with diverse objectives and 4 Funding the disability plan goals in mind. The design choices they make can affect whether premiums and benefits are taxed, 5 Employer funded non-contributory and change the post-tax value of the benefits and gross up plans paid to their employees. 6 Combination funding To help you understand these tax implications, this handbook provides a general overview of the 8 Tax choice plans federal income tax rules that apply to disability plans. Various design options are outlined, along 9 Evaluating tax choice plans with helpful tools and checklists, so you can better align your benefit plan design with specific tax 10 LTD plan cost comparisons planning objectives. Whatever your objectives and goals, we will help 12 Selecting the right coverage design you meet them. 13 Summary: Group disability funding options 14 For more information 2 Group disability tax | unum.com Unum: Your benefits partner What tax rules apply? Federal personal income tax law can be summarized as three Disability insurance provides income basic rules: protection for individuals who cannot • Anything of value that an individual receives is income. work, or cannot work full time, due to • All income is taxable. injury or sickness. Unum provides a • Exceptions may apply. variety of disability products with a In this publication, we’ll focus on the exception that applies to taxing group broad range of coverage, cost and disability insurance premiums and benefits: premium funding options. -
Tax Policy with Quasi-Geometric Discounting
Tax Policy With Quasi-Geometric Discounting Per Krusell, Burhanettin Kuru¸s¸cu,and Anthony A. Smith, Jr.1 ABSTRACT We study the effects of taxation in a model with a representative agent with time-inconsistent preferences: discounting is quasi-geometric. Utility is derived from consumption and leisure, and taxation can be based on consumption and investment spending as well as on capital and labor income. The model allows for closed-form solutions, and welfare comparisons can be made across different taxation systems. Optimal taxation analysis in this model leads to time-inconsistency issues for the government, assuming that the government shares the consumer’s preferences and cannot commit to future taxes. We study time-consistent policy equilibria for different tax constitutions. A tax constitution specifies what tax instruments are available, and we assume that the government can commit to a tax constitution. The results show that a constitution leaving the government with no ability to tax results in strictly higher welfare than one where the government has full freedom to tax. Indeed, for some parameter values, the best tax constitution of all is laissez-faire (even though the government is benevolent and fully rational). For other parameter values, it may be optimal to allow the government to use a less than fully restricted set of tax bases. 1 Introduction Some recent literature emphasizes the possibility that individual consumers have time-inconsistent preferences.2 One aspect of time-inconsistency in preferences is that consumers want to commit their future consumption levels. To the extent that they cannot, but are still rational in trying to resolve their dilemma, an interesting question is whether there is a role for government intervention in markets.