Tax Policy Update 16 27 April
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REPLACING CORPORATE TAX REVENUES with a MARK to MARKET TAX on SHAREHOLDER INCOME Eric Toder and Alan D
REPLACING CORPORATE TAX REVENUES WITH A MARK TO MARKET TAX ON SHAREHOLDER INCOME Eric Toder and Alan D. Viard October 2016 ABSTRACT We propose reducing the corporate tax rate to 15 percent and replacing the foregone revenue with a tax at ordinary income rates on the accrued, or mark-to-market income of American shareholders of publicly traded corporations, accompanied by an imputation credit for U.S. corporate income taxes paid. The proposal would dramatically reduce the tax significance of the source of corporate profits and the residence of corporations, both of which can be easily manipulated. Lowering the corporate tax rate to 15 percent would encouraging a capital inflow to the United States and reduce incentives to shift reported profits overseas and engage in inversion transactions while continuing to impose tax on foreigners who earn economic rents from investing in the United States. The proposal includes provisions for averaging of mark-to- market income, transition relief for firms that move from closely held to publicly traded status, and other measures to address the challenges of mark-to-market taxation. We estimate that the proposal would be approximately revenue-neutral and would make the distribution of the tax burden slightly more progressive. A revised version of the article was been published in the September 2016 issue of the National Tax Journal, Volume 69 (3), 701-731. The findings and conclusions contained within are those of the author and do not necessarily reflect positions or policies of the Tax Policy Center or its funders. I. INTRODUCTION This paper presents a proposal for reform of the taxation of corporate income. -
Double Taxation of Corporate Income in the United States and the OECD
Double Taxation of Corporate Income in the United States and the OECD FISCAL Taylor LaJoie Elke Asen FACT Policy Analyst Policy Analyst No. 740 Jan. 2021 Key Findings • The Tax Cuts and Jobs Act lowered the top integrated tax rate on corporate income distributed as dividends from 56.33 percent in 2017 to 47.47 percent in 2020; the OECD average is 41.6 percent. • Joe Biden’s proposal to increase the corporate income tax rate and to tax long-term capital gains and qualified dividends at ordinary income rates would increase the top integrated tax rate on distributed dividends to 62.73 percent, highest in the OECD. • Income earned in the U.S. through a pass-through business is taxed at an average top combined statutory rate of 45.9 percent. • On average, OECD countries tax corporate income distributed as dividends at 41.6 percent and capital gains derived from corporate income1 at 37.9 percent. • Double taxation of corporate income can lead to such economic distortions as reduced savings and investment, a bias towards certain business forms, and debt financing over equity financing. • Several OECD countries have integrated corporate and individual tax codes to eliminate or reduce the negative effects of double taxation on corporate The Tax Foundation is the nation’s income. leading independent tax policy research organization. Since 1937, our research, analysis, and experts have informed smarter tax policy at the federal, state, and global levels. We are a 501(c)(3) nonprofit organization. ©2021 Tax Foundation Distributed under Creative Commons CC-BY-NC 4.0 Editor, Rachel Shuster Designer, Dan Carvajal Tax Foundation 1325 G Street, NW, Suite 950 Washington, DC 20005 202.464.6200 1 In some countries, the capital gains tax rate varies by type of asset sold. -
GAO-05-1009SP Understanding the Tax Reform Debate: Background, Criteria, and Questions
Contents Preface 1 Introduction 4 Section 1 7 The Current Tax System 7 Revenue— Historical Trends in Tax Revenue 13 Taxes Exist to Historical Trends in Federal Spending 14 Borrowing versus Taxing as a Source of Fund Resources 15 Government Long-term Fiscal Challenge 17 Revenue Effects of Federal Tax Policy Changes 19 General Options Suggested for Fundamental Tax Reform 21 Key Questions 22 Section 2 24 Equity 26 Criteria for a Equity Principles 26 Good Tax Measuring Who Pays: Distributional Analysis 30 System Key Questions 33 Economic Efficiency 35 Taxes and Economic Decision Making 37 Measuring Economic Efficiency 40 Taxing Work and Savings Decisions 41 Realizing Efficiency Gains 43 Key Questions 43 Simplicity, Transparency, and Administrability 45 Simplicity 45 Transparency 47 Administrability 49 GAO-05-1009SP i Contents Trade-offs between Equity, Economic Efficiency, and Simplicity, Transparency, and Administrability 52 Key Questions 52 Section 3 54 Deciding if Transition Relief Is Necessary 54 Transitioning Identifying Affected Parties 55 to a Different Revenue Effects of Transition Relief 56 Policy Tools for Implementing Tax System Transition Rules 56 Key Questions 57 Appendixes Appendix I: Key Questions 58 Section I: Revenue Needs—Taxes Exist to Fund Government 58 Section II: Criteria for a Good Tax System 59 Equity 59 Efficiency 60 Simplicity, Transparency, and Administrability 61 Section III: Transitioning to a Different Tax System 62 Appendix II: Selected Bibliography and Related Reports 63 Government Accountability Office 63 Congressional -
An Analysis of the Graded Property Tax Robert M
TaxingTaxing Simply Simply District of Columbia Tax Revision Commission TaxingTaxing FairlyFairly Full Report District of Columbia Tax Revision Commission 1755 Massachusetts Avenue, NW, Suite 550 Washington, DC 20036 Tel: (202) 518-7275 Fax: (202) 466-7967 www.dctrc.org The Authors Robert M. Schwab Professor, Department of Economics University of Maryland College Park, Md. Amy Rehder Harris Graduate Assistant, Department of Economics University of Maryland College Park, Md. Authors’ Acknowledgments We thank Kim Coleman for providing us with the assessment data discussed in the section “The Incidence of a Graded Property Tax in the District of Columbia.” We also thank Joan Youngman and Rick Rybeck for their help with this project. CHAPTER G An Analysis of the Graded Property Tax Robert M. Schwab and Amy Rehder Harris Introduction In most jurisdictions, land and improvements are taxed at the same rate. The District of Columbia is no exception to this general rule. Consider two homes in the District, each valued at $100,000. Home A is a modest home on a large lot; suppose the land and structures are each worth $50,000. Home B is a more sub- stantial home on a smaller lot; in this case, suppose the land is valued at $20,000 and the improvements at $80,000. Under current District law, both homes would be taxed at a rate of 0.96 percent on the total value and thus, as Figure 1 shows, the owners of both homes would face property taxes of $960.1 But property can be taxed in many ways. Under a graded, or split-rate, tax, land is taxed more heavily than structures. -
Taxation of Land and Economic Growth
economies Article Taxation of Land and Economic Growth Shulu Che 1, Ronald Ravinesh Kumar 2 and Peter J. Stauvermann 1,* 1 Department of Global Business and Economics, Changwon National University, Changwon 51140, Korea; [email protected] 2 School of Accounting, Finance and Economics, Laucala Campus, The University of the South Pacific, Suva 40302, Fiji; [email protected] * Correspondence: [email protected]; Tel.: +82-55-213-3309 Abstract: In this paper, we theoretically analyze the effects of three types of land taxes on economic growth using an overlapping generation model in which land can be used for production or con- sumption (housing) purposes. Based on the analyses in which land is used as a factor of production, we can confirm that the taxation of land will lead to an increase in the growth rate of the economy. Particularly, we show that the introduction of a tax on land rents, a tax on the value of land or a stamp duty will cause the net price of land to decline. Further, we show that the nationalization of land and the redistribution of the land rents to the young generation will maximize the growth rate of the economy. Keywords: taxation of land; land rents; overlapping generation model; land property; endoge- nous growth Citation: Che, Shulu, Ronald 1. Introduction Ravinesh Kumar, and Peter J. In this paper, we use a growth model to theoretically investigate the influence of Stauvermann. 2021. Taxation of Land different types of land tax on economic growth. Further, we investigate how the allocation and Economic Growth. Economies 9: of the tax revenue influences the growth of the economy. -
Guide to Fiscal Information
Guide to Fiscal Information Key Economies in Africa 2014/15 Preface This booklet contains a summary of tax and investment information pertaining to key countries in Africa. This year’s edition of the booklet has been expanded to include an additional five countries over- and-above the thirty-five countries featured in last year’s edition. The forty countries featured this year comprise: Algeria, Angola, Benin, Botswana, Burkina Faso, Burundi, Cameroon, Chad, Congo (Brazzaville), Democratic Republic of Congo (DRC), Egypt, Ethiopia, Equatorial Guinea, Gabon, The Gambia, Ghana, Guinea Conakry, Ivory Coast, Kenya, Lesotho, Libya, Madagascar, Malawi, Mauritania, Mauritius, Morocco, Mozambique, Namibia, Nigeria, Rwanda, Senegal, Sierra Leone, South Africa, South Sudan, Swaziland, Tanzania, Tunisia, Uganda, Zambia and Zimbabwe. Details of each country’s income tax, VAT (or sales tax), and other significant taxes are set out in the publication. In addition, investment incentives available, exchange control regimes applicable (if any) and certain other basic economic statistics are detailed. The contact details for each country are provided on the cover page of each country chapter/ section and also summarised on page 4, Tax Leaders in Africa. An introduction to the Africa Tax Desk (including relevant contact details) is provided on page 3, Africa Tax Desk. This booklet has been prepared by the Tax Division of Deloitte. Its production was made possible by the efforts of: • Moray Wilson, Adrienne Snyman and Susan Heiman – editorial management, content and design. • Bruno Messerschmitt, Musa Manyathi and Sarah Naiyeju – Deloitte Africa Tax Desk. • Deloitte colleagues (and Independent Correspondent Firm staff where necessary) in various cities/offices in Africa and elsewhere. -
Dividends and Capital Gains Information Page 1 of 2
Dividends and Capital Gains Information Page 1 of 2 Some of the dividends you receive and all net long term capital gains you recognize may qualify for a federal income tax rate As noted above, for purposes of determining qualified dividend lower than your federal ordinary marginal rate. income, the concept of ex-dividend date is crucial. The ex- dividend date of a fund is the first date on which a person Qualified Dividends buying a fund share will not receive any dividends previously declared by the fund. A list of fund ex-dividend dates for each Qualified dividends received by you may qualify for a 20%, 15% State Farm Mutual Funds® dividend paid with respect to 2020, or 0% tax rate depending on your adjusted gross income (or and the corresponding percentage of each dividend that may AGI) and filing status. For single filing status, the qualified qualify as qualified dividend income, is provided below for your dividend tax rate is 0% if AGI is $40,000 or less, 15% if AGI is reference. more than $40,000 and equal to or less than $441,450, and 20% if AGI is more than $441,450. For married filing jointly Example: status, the qualified dividend tax rate is 0% if AGI is $80,000 or You bought 10,000 shares of ABC Mutual Fund common stock less, 15% if AGI is more than $80,000 and equal to or less than on June 8, 2020. ABC Mutual Fund paid a dividend of 10 cents $496,600, and 20% if AGI is more than $496,600. -
Poland: Tax Reform in the Light of EU Accession
A WORLD BANK COUNTRY STUDY TAX REFORMS IN THE LIGHT OF EUACCESSION THE CASE OF POLAND The World Bank Washington, D.C. TABLE OF CONTENTS ACRONYMS AND ABBREVIATIONS ................................................................................iv ACKNOWLEDGEMENTS....................................................................................................... v EXECUTIVE SUMMARY........................................................................................................ vi CHAPTER I: VALUE-ADDED TAX..................................................................................... 1 A. Comparative Survey................................................................................................... 1 B. The Agricultural Sector.............................................................................................. 2 C. Other Special Schemes............................................................................................... 4 D. Rate Structure............................................................................................................. 8 E. Intra-Union Transactions: The Debate...................................................................... 10 F. VAT Information Exchange System (VIES) ............................................................. 12 CHAPTER II: EXCISES........................................................................................................... 17 A. Overview................................................................................................................... -
Tax Heavens: Methods and Tactics for Corporate Profit Shifting
Tax Heavens: Methods and Tactics for Corporate Profit Shifting By Mark Holtzblatt, Eva K. Jermakowicz and Barry J. Epstein MARK HOLTZBLATT, Ph.D., CPA, is an Associate Professor of Accounting at Cleveland State University in the Monte Ahuja College of Business, teaching In- ternational Accounting and Taxation at the graduate and undergraduate levels. axes paid to governments are among the most significant costs incurred by businesses and individuals. Tax planning evaluates various tax strategies in Torder to determine how to conduct business (and personal transactions) in ways that will reduce or eliminate taxes paid to various governments, with the objective, in the case of multinational corporations, of minimizing the aggregate of taxes paid worldwide. Well-managed entities appropriately attempt to minimize the taxes they pay while making sure they are in full compliance with applicable tax laws. This process—the legitimate lessening of income tax expense—is often EVA K. JERMAKOWICZ, Ph.D., CPA, is a referred to as tax avoidance, thus distinguishing it from tax evasion, which is illegal. Professor of Accounting and Chair of the Although to some listeners’ ears the term tax avoidance may sound pejorative, Accounting Department at Tennessee the practice is fully consistent with the valid, even paramount, goal of financial State University. management, which is to maximize returns to businesses’ ownership interests. Indeed, to do otherwise would represent nonfeasance in office by corporate managers and board members. Multinational corporations make several important decisions in which taxation is a very important factor, such as where to locate a foreign operation, what legal form the operations should assume and how the operations are to be financed. -
Recycling Ecotaxes Towards Lower Labour Taxes
Implementing a Double Dividend: Recycling Ecotaxes Towards Lower Labour Taxes Antonio Manresa ([email protected]) Departament de Teoria Econòmica and CREB Universitat de Barcelona 08034-Barcelona, Spain Ferran Sancho ([email protected]) Departament d'Economia Universitat Autònoma de Barcelona 08193-Bellaterra, Spain History: Fist draft April 2002 Revised draft August 2002, October 2002 __________________________________________________________________________ This work has been possible thanks to the financial support of the Regidoria de Medi Ambient de l'Ajuntament de Barcelona. Institutional support from research grants SEC2000-0796 and SGR2001-0029 (first author) and SEC2000-0390 and SGR2001-0164 (second author) are also gratefully acknowledged. Stated opinions are those of the authors and therefore do not reflect the viewpoint of the supporting institutions. Abstract In this paper we follow the tradition of applied general equilibrium modelling of the Walrasian static variety to study the empirical viability of a double dividend (green, welfare, and employment) in the Spanish economy. We consider a counterfactual scenario in which an ecotax is levied on the intermediate and final use of energy goods. Under a revenue neutral assumption, we evaluate the real income and employment impact of lowering payroll taxes. To appraise to what extent the model structure and behavioural assumptions may influence the results, we perform simulations under a range of alternative model and policy scenarios. We conclude that a double dividend –better environmental quality, as measured by reduced CO2 emissions, and improved levels of employment– may be an achievable goal of economic policy. Keywords: double dividend, tax recycling, ecotaxes. JEL code: H21, H22, C68 - 2 - 1. Introduction One of the most controversial topics in environmental public economics is the viability of a double dividend ensuing a fiscal reform. -
Highlights of the Unified Tax Reform Framework
HIGHLIGHTS OF THE UNIFIED TAX REFORM FRAMEWORK Lowers Rates for Individuals and Families The framework shrinks the current seven tax brackets into three – 12%, 25% and 35% – with the potential for an additional top rate for the highest-income taxpayers to ensure that the wealthy do not contribute a lower share of taxes paid than they do today. Doubles the Standard Deduction and Enhances the Child Tax Credit The framework roughly doubles the standard deduction so that typical middle-class families will keep more of their paycheck. It also significantly increases the Child Tax Credit. Eliminates Loopholes for the Wealthy, Protects Bedrock Provisions for Middle Class To provide simplicity and fairness the framework eliminates many itemized deductions that are primarily used by the wealthy, but retains tax incentives for home mortgage interest and charitable contributions, as well as tax incentives for work, higher education, and retirement security. Repeals the Death Tax and Alternative Minimum Tax (AMT) The framework repeals the unfair Death Tax and substantially simplifies the tax code by repealing the existing individual AMT, which requires taxpayers to do their taxes twice. Creates a New Lower Tax Rate and Structure for Small Businesses The framework limits the maximum tax rate for small and family-owned businesses to 25% - significantly lower than the top rate that these businesses pay today. To Create Jobs and Promote Competitiveness, Lowers the Corporate Tax Rate So that America can compete on level playing field, the framework reduces the corporate tax rate to 20% – below the 22.5% average of the industrialized world. To Boost the Economy, Allows “Expensing” of Capital Investments The framework allows, for at least five years, businesses to immediately write off (or “expense”) the cost of new investments, giving a much-needed lift to the economy. -
Ireland's Corporation Tax Roadmap
Ireland’s Corporation Tax Roadmap Incorporating implementation of the Anti-Tax Avoidance Directives Prepared byand the recommendationsDepartment of Finance of the Coffey Review September 2018 Prepared by the Department of Finance Ireland’s Corporation Tax Roadmap Incorporating implementation of the Anti-Tax Avoidance Directives and recommendations of the Coffey Review September 2018 Prepared by the Tax Policy Division, Department of Finance, Government Buildings, Upper Merrion Street, Dublin 2, D02 R583, Ireland Website: www.finance.gov.ie Contents Foreword by the Minister ........................................................................................................................ i The journey so far – international tax reform in recent years ............................................................... 1 Actions Ireland has taken on corporate tax ............................................................................................ 4 EU Anti-Tax Avoidance Directives ........................................................................................................... 6 ATAD Interest Limitation ..................................................................................................................... 7 ATAD Exit Tax ...................................................................................................................................... 7 ATAD General Anti-Abuse Rule ........................................................................................................... 8 ATAD Controlled