Federal Revenue Research Articles

The Progress of Privatization and the Situation in Regard of Ownership Relations in 2013

The most important event of 2013 was the approval of the Forecast Plan (Program) of Federal Property Privatization and the Main Directions of Federal Property Privatization for 2014-2016. Its most significant distinctive feature, in which it differs from the previously issued document of the same type, was the introduction of some serious alterations to the privatization plans for biggest companies. The list of assets earmarked for privatization remained essentially the same as before. However, in contrast to the privatization program for the period of 2011-2013, the reduction of state participation in the capital of many biggest companies will by no means imply that the government is going to lose the right of corporate control, or at least the possibility to influence corporate governance procedures. The aggregate volume of federal budget revenue generated by privatization (or sale) transactions and use of state property in 2013 will drop on the previous year by nearly one-third, and by more than half when adjusted by the amount of revenue generated in 2012 by the RF Central Bank (the Bank of Russia) from the sale of a stake in Sberbank. Nevertheless, the revenue figure for 2012 in this budget item was the third highest since the early 2000s following the record high of 2012 and the 2011 indices.

The impact of the law 10,267/2001 in the brazilian rural registration

The publication of the Law 10,267 of 08/28/2001 changed the paradigm of rural registration in Brazil, because this law known as the "Law of Georeferencing" has created the National Registration of Rural Property, that unifies in a common basis different registrations present in several government agencies, such as the National Institute for Colonization and Agrarian Reform (INCRA), the Secretariat of Federal Revenue, the Brazilian Institute of Environment and Natural Resources, and the National Indian Foundation. Also, this new registration system has a graphical component which has not existed until such date, where the boundaries of rural property are georeferenced to the Brazilian Geodetic System. This new paradigm has resulted in a standardization of the survey and its representation of rural properties according to the Technical Standard for Georeferencing of Rural Properties, published by INCRA in compliance with the new legislation. Due to the georeferencing, the creation of a public GIS of free access on the Internet was possible. Among the difficulties found it may be observed the great Brazilian territory, the need for specialized professionals, and especially the certification process that INCRA has to perform for each georeferenced property. It is hoped that this last difficulty is solved with the implementation of the Land Management System that will allow automated and online certification, making the process more transparent, agile and fast.

Judicial Modesty in the Wartime Context, Roosevelt v. Meyer (1863)

Judicial Modesty in the Wartime Context, Roosevelt v. Meyer (1863) DAWINDER S. SIDHU “The most important thing we do is not doing,” Justice Louis D. Brandeis noted ofthe Supreme Court.1 At the height of the Civil War, the Supreme Court in Roosevelt v. Meyer2 claimed that it could not review, and therefore let stand, a state court decision upholding the Legal Tender Act (“Act”),3 a critical wartime measure designed to stabilize the Union economy and fund the Union’s war efforts. In this essay, I suggest that this oftoverlooked case warrants the legal commun­ ity’s consideration because it implicates a question fundamental to our constitutional system: should the courts decline judicial review—or, “not do”—in order to facilitate government responses to wartime challenges? The Legal Tender Act In the process of establishing “one great, respectable, and flourishing empire,”4 the Framers anticipated the possibility that the United States would split into two distinct political bodies, and that this disunion would occur specifically along northern and southern lines.5 One generation later, the prospect of this North-South division was altogether real. In his March 4, 1861 inaugural address, Abraham Lincoln acknowledged that the common ties among the North and South were bending, but urged the people not to “break our bonds of affection.”6 During the seminal speech, President Lincoln pledged to keep the peace, provided that the North was not subject to Southern provocation or aggression. There shall be “no bloodshed or violence, and there shall be none,” he declared, “unless it be forced upon the national authority.”7 Soon thereafter, on April 12, 1861, confederates bombarded Fort Sumter, firing the opening salvo and thereby triggering the condition in President Lincoln’s inaugural. The “one great” nation was at war with itself. To sustain the war effort, the Union had to withstand wartime stresses on the econo­ my. “Wars have now become rather wars of the purse than of the sword,” observed Chief Justice Oliver Ellsworth as early as 1788.8 To ROOSEVELT v. MEYER AND JUDICIAL MODESTY 191 the extent that war poses both financial and existential threats to a nation, the Union’s initial financial situation was precarious and thus its ability to respond to the rebellion seriously compromised. On one side of the ledger, the Union’s wartime costs were growing at a rapid clip. On April 15, 1861, President Lincoln activated the militia, charging it with the awesome responsibility to “maintain the honor, the integrity, and the existence of our National Union[.]”9 President Lincoln made additional calls fortroops that year, leading to a dramatic expansion of the Union army from 16,402 soldiers on January 1, 1861 to 575,917 soldiers by the end of the year. These and other wartime preparations and necessaries were quite costly. Indeed, federal expendi­ tures ballooned from $63.1 million in 1860 to $474.8 million in 1862. By January of 1862, war costs approached $2 million per day. On the other side, federal revenues stagnated. For example, most federal revenue came from customs duties, and income from this source increased only slightly from $39.6 million in 1861 to $49.1 million in 1862. The federal income tax was not implemented until 1862,10 and the meager revenues from customs duties and other taxes could not even cover the interest on the federal debt.11 The federal government could not rest its wartime funding on borrowing because the federal government was considered a poor credit risk. Put simply by Charles Fairman, the “treasury was empty” and the “Government’s credit had been shattered.”12 The combination ofweak revenues and rising costs conspired to bloat the federal debt, which swelled from $75 million in 1861 to $505 million the following year. In response to this acute, unsustainable situation, the federal government was com­ pelled to experiment with various economic initiatives. Most notably, it introduced paper notes as currency. At the onset of the Civil War, regular exchange took place through the use of specie (z'.e., gold or silver coin, also called “hard money”) rather than paper money. In July of 1861, Congress authorized the Secretary of the Treasury, Salmon P. Chase, to issue...

Predicting the Total Economic Impacts of Invasive Species: The Case of the Red Streaked Leafhopper

This paper lays out a framework for predicting the agricultural losses caused by an impeding invasion of a non-native species and for estimating the total economic impacts associated with the invasion, including direct, indirect and induced economic impacts. Along with the establishment of predicted total economic impacts, effects on employment and tax revenues are estimated using an input-output model. These estimates are essential for policy-makers to formulate appropriate responses. The framework is then applied to the case of the Red Streaked Leafhopper in the sugarcane producing regions of Louisiana. Results show that total annual impacts can be as high as $75 million from the leafhopper or as high as $956 million from the leafhopper carrying a specific phytoplasm after 25 years. State and local governments would lose $683,000 annually while federal revenues would be reduced by $3.3 million after 25 years. Employment effects from the leafhopper’s spread range from 821 lost jobs with just the leafhopper to 10,397 lost jobs with the leafhopper and phytoplasm at 25 years, an almost 0.1% point increase in Louisiana’s unemployment at current employment levels.

Identifying the Stance of Monetary Policy at the Zero Lower Bound: A Markov-Switching Estimation Exploiting Monetary-Fiscal Policy Interdependence

In this paper, I propose an econometric technique to estimate a Markov-switching Taylor rule subject to the zero lower bound of interest rates. I show that incorporating a Tobit-like specification allows to obtain consistent estimators. More importantly, I show that linking the switching of the Taylor rule coefficients to the switching of the coefficients of an auxiliary uncensored Markov-switching regression improves the identification of an otherwise unidentifiable prevalent monetary regime. To illustrate the proposed estimation technique, I use U.S. quarterly data spanning 1960:1-2013:4. The chosen auxiliary Markov-switching regression is a fiscal policy rule where federal revenues react to debt and the output gap. Results show that there is evidence of policy co-movements with debt-stabilizing fiscal policy more likely accompanying active monetary policy, and vice versa.

Lower Of Cost Or Market Inventory Valuation: IFRS Versus US GAAP

The lower of cost versus market (LCM) controversy regarding inventory cost measurement is presented. The differences between International Financial Reporting Standards (IFRS) and United States (US) Generally Accepted Accounting Principles (GAAP) are analytically compared. The link between US federal tax law and US GAAP is emphasized relative to a discussion of deferred taxes and potential US federal income tax revenue.

'Picking up the pieces': austerity urbanism, California and fiscal crisis

California continues to be at the epicentre of the current Great Recession. Cities around the state are facing a multiple-fronted assault on their fiscal situation. Although not new—the state’s precarious financial situation is the stuff of legends—the cutting in federal revenues, together with the decline in property taxes stemming from the drop in house prices and the rising costs of servicing debt incurred through years of speculative growth strategies have left a number of city governments in the state horribly exposed. This paper explores the place of a number of Californian cities in the context of the wider onset of US austerity urbanism. This constitutes a deepening and widening of some aspects of earlier neo-liberalisation.

Is the Tax Tide Turning Against the Rich?

The trend of the last 50 years has been to reduce taxes on the wealthy. But this article argues that the United States has come to the end of that trend. The need for additional federal revenue, and rising wealth and income inequality are fueling a change in direction. There is rising support in Congress for higher taxes on the wealthy, strong support in public opinion polls, increasing numbers of the wealthy supporting higher taxes on themselves, and economic research showing that the economic cost of higher taxes on the rich is minimal. Although it will not happen soon, it is inevitable that taxes on the wealthy will rise in the future.

Mulitnationalisation, Globalisation and Internationalisation Breed Diversity: The Nigerian Experience

Nigeria is said to be a middle income, mixed economy and emerging market, with an alarming expanding financial, service, communications, and entertainment sectors. The country is positioned 30th in the world in terms of GDP (PPP) as of 2011, this is despite its emergent, though currently underperforming manufacturing sector. The country is the third-largest economy on the continent (behind South Africa and Egypt). The country has a capacity to produce a large proportion of goods and services for the West African region. It can therefore be categorized as the economic power house of the West African region As of 2000, oil and gas exports accounted for more than 98% of export earnings Nigeria’s and about 83% of federal government revenue, as well as generating more than 40% of its GDP. It also provides 95% of the country’s foreign exchange earnings, and about 65% of government budgetary revenue. This favourable economic indexes and realities attract investments from all over the world while the foreign investors will follow their investments. This paper relying on descriptive qualitative study will examine the impact of the inflow of foreign workers on the already workforce that is already experiencing complex diversity.

The State Budget in Q3 2013

According to data released by the RF Federal Treasury, in Q3 2013 the decline in federal budget revenues was occurring at a slightly slower rate than previously. Thus, over the course of January-September 2013, the federal budget’s revenue and its oil and gas revenues dropped by 1.7 p.p. of GDP and 0.9 p.p. of GDP respectively on the same period of 2012, while over the course of the first half year of 2013 they had dwindled by 2.1 p.p. of GDP and 1.6 p.p. of GDP respectively on the first half year of 2012. In January-August 2013, the consolidated budget revenue of RF subjects amounted to 12.1% of GDP, which represented a 0.3 p.p. of GDP rise on their consolidated budget revenue in January-June 2013. At the same time, Russia’s budget system has very small potential for further growth in revenues, which is especially true of the consolidated budgets of those RF subjects that are not engaged in the export of carbohydrates. Therefore, apart from taking measures designed to optimize federal budget spending, the RF Government must pay special attention to the state of regional budgets and, maybe, to revise its approach to the sphere of inter-budget relations.

Federal Income Tax Revenue Volatility Since 1966

Over the past two decades, the United States federal income tax revenue has shown periods of increased volatility. Throughout the 1990s the growth rate of individual income taxes was between 5 and 10 percent, it has swung between H12 and +12 percent from 2000 to 2006. Meanwhile wage income has been relatively stable during this period while capital income annual growth has swung from H20 to +50 percent between 2000 and 2006. Looking deeper into the income composition of taxable sources, we find that tax revenue has increased its dependence on volatile capital gains income, due in part to an increasing dependence on highHincome taxpayers. In the decade ending 1976, capital and business income represented about 17.1 percent of gross income, including about 3.1 percent for capital gains and losses. While the share of capital and business incomes have been relatively stable over time, the share of net capital gains or losses has increased to about 5.8 percent of gross income, on average the decade ending 2006, an almost twofold compared to four decades ago. Using a database on individual tax files from 1966 to 2006 from the Internal Revenue Service Public Use Files, we estimate the sources of tax revenue volatility over time and by income groups. We find strong evidence that since 1966, the growth rate of tax revenue has become increasingly dependent on the growth rate of capital income, while its dependence on wage income has decreased. Before 1986, both capital income growth and wage income growth were negatively related with income tax growth, suggesting a smoothing effect of taxation. However, after 1986, capital income growth has been positively related to income tax revenue growth, and this positive relationship has increased more than tenfold in 20 years. We also find that this increased dependence of tax revenue growth on capital income is essentially related to top income earners. The results show evidence that capital income growth and tax revenue growth almost continuously increased from the bottom to the top quintile.

National Budget in January-August 2013

Russia’s Federal Treasury reports that in the period of January thru August 2013 federal budget revenues and expenditures contracted by 2.2 and 1.7 p.p. of GDP respectively, as compared to the corresponding period in 2012. At the end of eight months of 2013 the federal budget ran a surplus of Rb 391.1bn, or 0.9% of GDP, having declined by 0.5 p.p. of GDP against the value observed in January-August in the previous year. Federal budget oil and gas deficit in January-August 2013 contracted by 0.8 p.p. of GDP as compared to the corresponding period of the previous year, and accounted for 8.9% of GDP.

The Effects of Electronic Publication on Social Science Researchers in Canada

This paper considers the effects of electronic publishing on social science researchers, specifically as it relates to statistical data dissemination. Data of interest to social scientists are increasingly available only in electronic formats and, in Canada at least, at inflated prices. Canadian federal government cost-recovery and revenue generation initiatives of the mid-1980s encouraged government agencies to treat information as a marketable commodity.

Russiaas State Budget in January-July 2013

According to the Federal Treasury’s estimates, the volume of federal budget revenue over the first 7 months of 2013 dropped by 2.2 p.p. of GDP on the corresponding period of 2012. As a positive fact, it can be noted that the rate of decline in the volume of federal budget expenditure as a share of GDP over the five recent months of 2013 against its levels recorded over the corresponding periods of last year has not been accelerating, being stable at the level of 2.1-2.2 p.p. of GDP. At the same time, the situation with regard to the dynamics of revenue of the consolidated budget of RF subjects has been aggravating: while the results of the first three months of 2013 pointed to its decline by 1.8 p.p. of GDP on January-March of last year, the volume of revenue for the period of January-July 2013 dropped still further - to 2.1 p.p. of GDP on the first six months of 2012. Thus, the medium-term risks for the Russian budgetary system’s sustainability will depend on the ability of the consolidated budgets of RF subjects to remain well-balanced, as well as on the regions’ ability to provide financing for their assumed vobligations without drawing on additional allocations from the federal budget.

The financial impact of unrepaired cleft lip and palate in the Philippines

ObjectivesThere are over 96 million people in the Philippines. Close to 77 thousand persons in this country have orofacial clefting. We estimate nearly 64 thousand are unrepaired. Unemployment and underemployment because of the communication disorders associated with unrepaired clefts will affect family income and hence tax revenues. The purpose of this study is to understand the financial impact of unrepaired cleft lip and/or palate on families and identify how that would translate to the Philippine government in tax revenues. MethodsThe incidence of orofacial cleft in the Philippines was estimated to be at least 1 in 750 people, with only 16% anticipated to be repaired under current conditions. Assuming a 21% unemployment rate in subjects with untreated clefts, and a tax rate of 6–12.4%, projected lost personal income and federal tax revenue was calculated. ResultsIn 2012 alone the financial impact on the families may be as much as $US 73–88 million in lost revenue from unemployment and underemployment. This would cost the government between $8.0 and $9.8 million dollars in lost tax revenue. Over a 20 year period at least $US 1.7 billion dollars in family income would be affected costing the government at least $US 194 million in taxes. ConclusionBy appropriately caring for the cleft population tax revenues should increase substantially. The development of the infrastructure for surgical care of this problem would be costly but could be more than offset by revenues. Inattention to surgically correctable causes of communication disorders is not affordable.

New Evidence on Taxes and the Timing of Birth

This paper uses data from the universe of tax returns filed between 2001 and 2010 to test whether parents shift the timing of childbirth around the New Year to gain tax benefits. Filers have an incentive to shift births from early January into late December, through induction or cesarean delivery, because child-related tax benefits are not prorated. We find evidence of a positive, but very small, effect of tax incentives on birth timing. An additional $1,000 of tax benefits increases the probability of a late-December birth by only about 1 percentage point. We argue that the response to tax incentives is small in part because of confusion about eligibility and delays in the issuance of Social Security numbers for newborns, as well as a lack of control over medical procedures on the part of filers with the highest tax values. In contrast to this small behavioral response, we do document a substantial reporting response among self-employed parents facing changes in the Earned Income Tax Credit as a result of a child's birth. We estimate that this reporting response reduces federal revenue by hundreds of millions of dollars per year. (JEL H24, H31, J13, J23)

The effect of national revenues on sub-national revenues evidence from the U.S.

I present for the first time an empirical examination of the impact of total federal revenues on total sub-national proceeds. Prior theory recognizes that the effects of national revenues on sub-national revenue-raising are ambiguous. Earlier studies have focused on vertical relationships between particular tax bases, such as the impact of federal commodity taxes on state or provincial commodity tax rates. Using a panel of data from U.S. states over the recent decade, I find an economically and statistically significant degree of federal crowding in of state revenues. Also, employing a difference-in-differences design to study the impact of a 2004 change in the federal deductibility of state general sales taxes, I find modest evidence that deductibility increased state revenues in states more dependent on the sales tax. I note the potential implications of these results for fiscal federalism theory and legal controversies over federal conditional spending.

The Redistributive Potential of Transfer Taxation

The United States imposes substantial federal taxes on estates, gifts, and generation-skipping transfers exceeding high exemption levels (currently US$5.25 million). These transfer taxes are very distortionary compared to other federal taxes, and raise little revenue; their appeal lies in their distributional properties. Gratuitous transfers benefit both those who make the transfers and those who receive them; transfer taxes therefore impose burdens on both donors and recipients, in addition to distorting economic behavior. This article considers a potential reform of replacing federal transfer taxes with greater income taxes on the highest-income earners. Such a reform holds the prospect of raising additional federal tax revenue with improved efficiency and greater measured tax progressivity.

Russia’s State Budget in May 2013

In January–May 2013 the federal budget revenues decreased by 2.2 p.p. of GDP over the same period of the last year due to a reduction of oil and gas revenues by 1.5 p.p. of GDP and non-oil revenues by 0.7 p.p. of GDP. The consolidated revenues of the Subjects of the Russian Federation within the period under review also fell down by 2.0 p.p. of GDP relative to the first four months of 2012, the expenditures of the federal budget and the consolidated budget of the Russian Federation in January–April 2013 have decreased by 2.0 and 0.6 p.p. of GDP against the relevant period of the last year, accordingly. The federal budget surplus amounted to 0.5% of GDP and surplus of the consolidated budget of the Subjects of the Russian Federation – to 1.6% of GDP.

State Budget in January-April 2013

According to the Federal Treasury, in January-April 2013, the federal budget revenues have been decreased by 2.2 p.p. of GDP as compared with the same period of the last year due to a reduction of oil and gas revenues by 1.7 p.p. of GDP, as well as non-oil revenues decline by 0.5 p.p. of GDP. The consolidated budget of RF Subjects revenues have also decreased with January–March 2013 by 1.8 p.p. of GDP against the three months of 2012. In May of this year, the Government of the Russian Federation has submitted to the State Duma a bill on amendments to the law on the federal budget, providing for reallocation of budgetary allocations within the limit of total expenditures of the federal budget for 2013 in the amount of Rb 171.2bn, including about Rb 4.3bn of budget expenditures to be addressed to additional funding in the Olympic Games “Sochi-2014”.