Income Shifting Research Articles

From multi-participant talk to genuine polylogue: shift-change briefing sessions at the hospital

The analysis of multi-participant talk in workplace settings raises new questions not only about specific features of polylogues, but also about the intricate connections between talk and working activity. The objects and cognitive artifacts of the work setting, the workers’ functions and status, and the actions, transactions, and social rules that organize activity in the workplace all play key roles in the structuring of this multi-participant talk. Based on data from meetings between the leaving shift and the in-coming shift in three French hospital wards, the article compares different types of structuring in multi-participant talk, switching from basic participation structures (symmetrical dilogues between leaving nurses and in-coming nurses, or between leaving parties and in-coming ones) to genuine polylogues occurring at specific moments. We attempt to determine what triggers such phenomena. The resulting comparative study allows us to investigate not only the role of local norms (talk and activity organization, use of cognitive artifacts), but also the role of professional status and production formats in constructing participation frameworks during shift changeovers.

Does Gender have any Effect on Aggregate Saving? An empirical analysis

This study investigates the effects of gender on aggregate saving. We test the hypothesis that shifts in women's relative income, which can affect their bargaining power within the household, have a discernible impact on household saving and, by extension, gross domestic saving, due to differing saving propensities by gender. The empirical analysis is based on panel data for a set of semi-industrialised economies, covering the period 1975-95. The results indicate that, as some measures of women's relative income and bargaining power increase, gross domestic saving rates rise. The implied gender disparity in saving propensities may be linked to differences in saving motives based on gender roles, and well as divergent experiences of economic vulnerability. These findings suggest the importance of understanding gender differences in planning for savings mobilisation and in the formulation of financial and investment policies.

Intangible Income, Intercompany Transactions, Income Shifting, and the Choice of Location

The links between intangible income, intercompany transactions, income shifting and the choice of location are investigated using data on U.S. parent corporations and their manufacturing subsidiaries. The objective is to better understand the income shifting process and its implications. In particular, do opportunities for income shifting distort "real" behavior such as the choice of location and the volume of intercompany transactions? Do prospective benefits from income shifting change behavior in both high-tax and low-tax locations? The results present a coherent, consistent picture. Income derived from R&D based intangibles accounts for about half of the income shifted from high-tax to low-tax countries. R&D intensive subsidiaries engage in a greater volume of intercompany transactions and, therefore, have more opportunities for income shifting. In addition, subsidiaries in locations with either very high or very low statutory tax rates, with a strong incentive to shift income in or out, also undertake a significantly larger volume of intercompany transactions. Finally, R&D intensive U.S. parent companies respond to the opportunities for income shifting by investing in countries with either very high or very low statutory tax rates. As a sidelight, we find that the allocation of debt among subsidiaries and the shifting of R&D based intangible income together account for virtually all of the observed difference in profitability between high and low tax countries.

The Dual Income Tax and Firms' Income Shifting Through the Choice of Organizational Form and Real Capital Investments

The dual income tax provides the self-employed entrepreneur with huge incentives to participate in tax minimizing income shifting to have more of his income taxed as capital income. The Norwegian split model is designed to remove these incentives, but it contains loopholes. The present paper concludes that the split model induces the self-employed entrepreneur to over-invest in firm real capital. In addition, the corporate organizational form serves as a tax shelter for high income entrepreneurs. The higher his income and the higher the difference between the marginal tax rates on labor and capital, the larger the incentives to incorporate.

Land rental values and the agrarian economy: England and Wales, 1500-1914

I use the rents and prices of land held by charities in England to estimate statistically nominal and real farmland rental values, including payments for tithe and taxes, from 1500 to 1912. The series measures rental values when land was rented in a competitive market, not the average rents paid by land occupiers which would often be lower because of customary leases. An advantage of the methods used here over older ones is that the sampling error in the series can be calculated. The series show rapid shifts of income toward landowners and away from wages around 1600 and 1800, but back toward wages after 1870. Land rental values are much higher before 1820 than in the recent series of Michael Turner, John Beckett and Bethany Afton. This implies that agricultural productivity was high before 1800: higher than could be consistent with an agricultural revolution either alongside or before the Industrial Revolution.

Cross‐Jurisdictional Income Shifting by U.S. Multinationals: Evidence from International Bond Offerings

We examine whether tax incentives influence where U.S. multinationals locate their interest deductions worldwide. Our sample includes international bond offerings by U.S. multinationals during 1987–1997 denominated in the currencies of Australia, Canada, France, Germany, Italy, Japan, or the United Kingdom. Our results suggest that U.S. multinationals’ debt location decisions take into account the effect of jurisdiction‐specific tax‐loss carryforwards and binding foreign tax credit limitations on the value of debt tax shields. Our results are also consistent with U.S. multinationals locating interest deductions in different tax jurisdictions as a mechanism to achieve tax‐motivated income shifting.

Nutrition in transition: The changing global nutrition challenge

The rapid shift in the stage of nutrition towards a pattern of degenerative disease is accelerating in the developing world. Data from China, as shown by the China Health and Nutrition Survey, between 1989 and 1993, are illustrative of these shifts. For example, an increase from 22.8 to 66.6% in the proportion of adults consuming a higher-fat diet, rapid shifts in the structure of diet as income changes, and important price relationships are examples that are presented. There appears to reflect a basic shift in eating preferences, induced mainly by shifts in income, prices and food availability, but also by the modern food industry and the mass media. Furthermore, the remarkable shift in the occupations structure in lower-income countries from agricultural labour towards employment in manufacturing and services implies a reduction in energy expenditure. One consequence of the nutrition transition has been a decline in undernutrition accompanied by a rapid increase in obesity. There are marked differences between urban and rural eating patterns, particularly regarding the consumption of food prepared away from home. Other issues considered are the fetal origins hypothesis, whereby the metabolic efficiencies that served well in conditions of fetal undernutrition become maladaptive with overnutrition, leading to the development of abnormal lipid profiles, altered glucose and insulin metabolism and obesity. Furthermore, obesity and activity are closely linked with adult-onset diabetes. The shift towards a diet higher in fat and meat and lower in carbohydrates and fibre, together with the shift towards less onerous physical activity, carries unwanted nutritional and health effects. It is also clear that the causes of obesity must be viewed as environmental rather than personal or genetic.

Income Shifting, Investment, and Tax Competition: Theory and Evidence from Provincial Taxation in Canada

We study corporate income competition when firms operating in multiple jurisdictions can shift income using financial planning strategies. Several such strategies, particularly intra-corporate lending, appear to be actively pursued by companies to reduce subnational corporate taxes in Canada. A simple theoretical model shows how interjurisdictional planning can give rise to asymmetries in jurisdictions' policies, with one jurisdiction becoming a tax haven to attract taxable income through financial transactions, while others set higher statutory rates. Further, increased competition from havens may paradoxically lead to increases by high-tax jurisdictions. Analysis of data from administrative records suggests income has pronounced effects on provincial bases in Canada. According to our preferred estimate, the elasticity of taxable income with respect to rates for tax shifting firms is 4.3, compared to 1.6 for other, comparable firms.

A Further Examination of Income Shifting Through Transfer Pricing Considering Firm Size and/or Distress

This study evaluates the effect of firm size on income shifting between tax jurisdictions through the use of transfer prices both before and after the passage of the Tax Reform Act of 1986 (TRA86). Prior research addressing income shifting through transfer pricing analyzes larger, financially sound firms. This empirical study extends the transfer pricing literature by including smaller and in some cases financially distressed firms in the sample and testing the effect by firm size on income shifting. Our findings suggest that smaller and/or distressed firms are less likely to shift income through transfer pricing than larger firms.

Family Change, Employment Transitions, and the Welfare State: Household Income Dynamics in the United States and Germany

Since the demise of modernization theory, social scientists have sought explanations for persisting differences in the stratification of industrialized societies, primarily by studying how educational and labor market institutions shape the life chances of individuals. This approach undervalues two key features of any stratification system: family dynamics and the welfare state. Employment changes, changes in household composition, and changes in the employment situation of a spouse or partner can all trigger large shifts in income and material well-being. The impact of these events is mediated by public tax and transfer mechanisms and by private actions taken by household members. This comparative analysis of household income dynamics in the United States and Germany shows that variations in welfare state policy produce distinct societal patterns of income mobility, and furthermore, shows that the relative importance of labor market events, family change, and welfare state policies for income dynamics depends on gender. The strong interrelationship between individual incentives and the structure of opportunity produces an asymmetry in the long-term impact of events. The negative effects of events that reduce income generally decay over time, while the effects of positive events generally persist.

Family Change, Employment Transitions, and the Welfare State: Household Income Dynamics in the United States and Germany

Since the demise of modernization theory, social scientists have sought explanations for persisting differences in the stratification of industrialized societies, primarily by studying how educational and labor market institutions shape the life chances of individuals. This approach undervalues two key features of any stratification system : family dynamics and the welfare state. Employment changes, changes in household composition, and changes in the employment situation of a spouse or partner can all trigger large shifts in income and material well-being. The impact of these events is mediated by public tax and transfer mechanisms and by private actions taken by household members. This comparative analysis of household income dynamics in the United States and Germany shows that variations in welfare state policy produce distinct societal patterns of income mobility, and furthermore, shows that the relative importance of labor market events, family change, and welfare state policies for income dynamics depends on gender. The strong interrelationship between individual incentives and the structure of opportunity produces an asymmetry in the long-term impact of events. The negative effects of events that reduce income generally decay over time, while the effects of positive events generally persist

Income distribution in rice–growing villages during the post‐Green Revolution periods: the Philippine case, 1985 and 1998

AbstractThis paper aims to examine changes in household income sources and its impact on household income distribution in the post‐Green Revolution periods in 1985 and 1998 in the rural Philippines. We found that there has been a structural shift of household income away from farm in favor of nonfarm labor income sources. This finding indicates that rural development is being led by nonfarm sectors. Such a shift has resulted in an increase in household income inequality as the distribution of nonfarm income has become less equal over time and was markedly more unequal than that of farm income in 1998.

Trends and Driving Factors in Income Distribution and Poverty in the OECD Area

This paper summarises trends and driving factors in income distribution and poverty in 21 OECD Member countries analysing separately the working- and the retirement-age populations. Shifts in relative incomes in the past ten years generally favoured prime-age and elderly age groups. Persons living in multi-adult households have seen their income shares rise somewhat, especially in households without children, or when there are two or more earners present. On the other hand, younger age groups generally lost ground, and relative income levels of single parents and persons in households with no earners tended to weaken further in many countries. There has been no generalised long-term trend in the distribution of disposable household incomes since the mid-1970s. However, during the more recent period (mid-1980s to mid-1990s), income inequality has increased in about half of the OECD countries studied, while none of the remaining countries recorded an unambiguous decrease in ...

Income Shifting and International Transfer Pricing: A Three‐Country Example

There is a long held belief that international transfer pricing (ITP) is used by multinational enterprises (MNEs) to minimize global tax liability. On the one hand, this is a rational economic response to market imperfections created by national governments. An alternative view decries such actions as anti‐competitive and an abuse of power. This article ex‐amines the potential benefit to enterprises of ITP manipulation when a real world combination of fiscal rules are simultaneously applied in practice. The countervailing impact of different national rules appears to result in ITP having a minor significance on parent after‐tax income. Differential rates cause minor benefits but the absence of a form of tax, such as withholding tax, can provide substantial opportunities to maximize global after‐tax income through the choice of transfer price. ITP can therefore provide benefits when national jurisdictions do not have consistent forms of taxation. In all the scenarios explored, major variations are apparent in the after‐tax income of subsidiaries operating under different combinations of fiscal regimes and ITP policies. The tension between head‐quarter and subsidiary management may be most pronounced when a subsidiary is located in a jurisdiction not having a complete range of tax forms.

An essay on the Life Cycle: Characterizing intertemporal behavior with uncertainty, human capital, taxes, durables, imperfect capital markets, and non-separable preferences

This paper formulates a general characterization of a household's portfolio choice and savings behavior in an environment with uncertain future interest rates, prices, wages, and factors influencing tastes. Savings may be invested in three types of assets: financial assets; human capital, which is non-tradable; and consumer durables, in which investment may be partially irreversible. Risk-return relations determine the optimal allocation of resources across assets at a point in time. The optimal intertemporal allocation of resources is determined by a restriction on the planned growth rate for the marginal utility of after-tax wealth, where growth rates depend on rates of time preference and measures of long-term riskless rates of interest. Given special assumptions, this marginal utility follows a martingale process as a consequence of optimizing behavior. Pricing formulae are developed for evaluating shifts in uncertain future income, wage, and price profiles. The relations characterizing portfolio and savings behavior presented here do not rely on particular distributional assumptions; they account for all forms of uncertainty including wage uncertainty induced by human capital investment; they allow for the non-marketability of assets; and the main results apply for very general functional form assumptions for preferences. In later sections, results are extended to incorporate income taxes and to account for a wide variety of imperfections in asset markets.

A Single Constant in a World of Change*

President Jackson, members of the Board of Directors, Fellows of the Academy, distinguished guests, and members of the Class of 1998: It is indeed an honor to have been asked to share my thoughts with you this afternoon. It was eight years ago, in this same auditorium, that I gave an address entitled “The Winds of Change.”6 I don't believe that any of us realized at that time just how hard the winds were blowing and how profound the changes in the practice of medicine, and therefore the practice of orthopaedics, in this country would be in the ensuing eight years. We have seen the control of clinical practice wrested from the hands of physicians by the managed-care administrators and the entrepreneurs of the for-profit health-care industry. We have seen the length of hospital admissions and the parameters of hospital care pass from control by the physicians to control by the giants of the insurance industry. As a result of these changes, we have seen the quality of care diminish, ostensibly in the interest of containing the accelerating costs of health care. However, the costs have only increased, with the profits going to the business interests of the health-care industry and to the stockholders instead of being passed back into the system to lessen the financial impact of health care on consumers. There has been a shift of income from quality high-technology medicine, with its necessary research and education, to the pockets of entrepreneurs and investors. Also, and probably most important of all, we are seeing increasing efforts to change the art and practice of medicine into a business, with cold cost-cutting efficiencies and attendance to a profitable bottom line becoming higher priorities than the quality of care and the sensitivity of the caregiver. The magnitude of these changes …

An Input–Output Analysis of the Nonprofit Sector in the USA and Germany

This paper presents an exploratory input–output analysis of the nonprofit sectors in former West Germany and the USA based on the conceptual and data structure provided by the System of National Accounts. When compared with the USA, the West German nonprofit sector catered more to government demands. A higher proportion of West German nonprofit services went to government and a smaller proportion went to households. In terms of the multiplier effect of nonprofit output, we find that an additional dollar of nonprofit services delivered to households and/or government induced indirectly an additional 83 cents of business output in the USA. By comparison, West Germany’s nonprofit sector had a lower multiplier effect, with 43 Pfennig per DM1. We also find that businesses have a much larger stake in nonprofit production as intermediate suppliers when compared to their role as intermediate consumers. The economic position the nonprofit sector occupies in both countries is that of a producing sector, taking inputs from businesses and providing outputs for households and governments. This general structural characteristic suggests that the nonprofit sector is particularly sensitive to changes in government policies as well as to shifts in private household incomes, yet relatively insensitive to demand changes in other industries.

Cross-Jurisdictional Income Shifting and Earnings Valuation

This research investigates the extent to which U.S. multinational enterprises (MNEs) engage in tax-motivated income shifting between the U.S. and foreign jurisdictions and whether investors differentially capitalize shifted income, based on its true source or its reported source. We find evidence that U.S. MNEs facing foreign tax rates that on average exceed the U.S. statutory tax rate shift taxable income into the United States, and that investors recognize firms' income-shifting patterns when valuing the foreign versus domestic components of reported earnings. We examine U.S. multinational manufacturing companies from 1984 to 1992 to determine the cross-sectional relation between firm-level foreign profit margins and average foreign tax rates. If U.S. MNEs respond to high (low) foreign tax rates by shifting income into (out of) the United States, then ceteris paribus we expect a negative relation between foreign profit margins and average foreign tax rates. In addition,

U.S. International Transactions in 1997

The U.S. current account deficit widened further in 1997, reaching $166 billion. U.S. imports of goods continued to exceed exports by a substantial margin. However, goods trade accounted for only a small part of the deterioration in the current account balance last year. The shift of investment income from positive to negative (the first time since 1914) was the major contributing factor; it reflected the cumulative effect of deficits in the current account that have persisted since 1982 and the balancing net capital inflows. The financial crises in Asia in the second half of 1997 visibly affected U.S. capital flows but influenced the U.S. current account in only a limited way in that year. Their effect on the U.S. current account is likely to be more apparent in 1998.

The Factory Question and Industrial England, 1830–1860 by Robert Gray

TECHNOLOGY AND CULTURE Book Reviews 157 rapid and reliable determination, occupies prominent places in po­ litical agendas, as was the case in Frankland’s day. Russell misses the opportunity to draw parallels of this kind, except when dealing with mainstream developments in chemistry and chemical education. This, however, is only a minor criticism of an otherwise exemplary study, one that contributes much to our understanding of the public and private worlds ofVictorian chemistry, its rivalries, and its leading protagonist. Anthony S. Travis Dr . Travis is deputy director of the Sidney M. Edelstein Center for the History and Philosophy of Science, Technology, and Medicine at the Hebrew University of Jerusalem. His recent publications include “Poisoned Groundwater and Contami­ nated Soil: The Tribulations and Trial of the First Major Manufacturer of Aniline Dyes in Basel,” Environmental History 2 (July 1997). The Factory Question and Industrial England, 1830-1860. By Robert Gray. Cambridge: Cambridge University Press, 1996. Pp. xiv+253; illustrations, tables, bibliography, index. $59.95 (cloth). Readers of Technology and Culturewill discover more about the lat­ ter than the former in this dense little volume. Its principal theme concerns controversies over regulating the length ofthe working day for juveniles and adult women in English textile mills. From that relatively narrow ground, the author addresses a broad range of is­ sues related to industrialization and its interpretation in contempo­ rary historiography. This cultural history approaches policy formula­ tion chiefly through analysis of rhetoric and symbolism, areas that offer academics a fertile field for insightful speculation and projec­ tion. Gray has drawn upon an impressive array of new monographs about the textile industries and communities in Lancashire and the West Riding of Yorkshire. A substantial portion of this recent litera­ ture has eluded the T&Creview process. Scholars interested in com­ parative textile history topics will find plenty to digest in the foot­ notes and select bibliography. The author intends to rescue the Industrial Revolution from the clutches ofeconomic history. During the reign ofMargaret Thatcher some practitioners of the dismal pseudoscience had disparaged the factory system as an agent of economic growth and a harbinger of social change. Gray does not attempt to refute the revisionists’ esti­ mates regarding incremental shifts in net national income and other indicators. Rather, following Maxine Berg and Pat Hudson, he relo­ cates the debate over the significance of industrialization to other terrain—the realms oflegal superstructure and social consciousness. The admirable introduction provides a tidy guide to the opposing 158 Book Reviews TECHNOLOGY AND CULTURE camps of contemporary historiography. Gray then moves through the two principal sections of his argument: first, the discourses cre­ ated or appropriated by various interests advocating, opposing, or vacillating about state intervention into the relations between textile employers and a portion of their work force; second, the evolution of regulatory practice as expressed through prosecutions under the 1833 Factory Act and subsequent extensions and modifications of its provisions between 1847 and 1853. Suffice it to say that the second section is more coherent, though less ambitious, than the first. In the exegesis of vocabulary and imagery we hear the voices of politicians, clergy, physicians, literati, cranks, and the occasional chorus of workers. Unfortunately for a study of this type, we do not hear enough of the original voices. Quotations are doled out rather sparingly, and between the snippets there stretches a vast acreage of interpretation ranging from sweeping generalization to elliptical microdetail. If this compressed mode of presentation is attributable to a publisher’s decision about the permissible length ofthis volume, then erring on the side of parsimony was an unfortunate decision. Gray is exceptionally sensitive to the subregional distinctions within the textile industry of the industrial North. He addresses, for example, the question of divisions among manufacturers over the issue of regulation. His impressive knowledge ofvariations in textile products and processes permits him to identify certain patterns of compliance with the Factory Acts as well as predispositions toward evasion of their provisions; not all offenders were backward rural mills whose proprietors disliked regulation because their throstle spinning frames and preparatory machinery could be tended effec­ tively by child labor. On the other hand, as Lindy Biggs observes in another context, some advanced factories...