Tax Policy Debate Research Articles

The Tax Policy Debate: How Accounting Researchers Can Obtain a Place at the Table

While academic accounting journals publish research with potential policy implications, policy makers often do not consider these articles. Useful information currently being produced by accounting researchers can have a greater policy impact if it is effectively integrated, presented, and disseminated to policy makers. This paper offers five recommendations aimed at increasing the probability that pertinent academic tax accounting research will be used in the policy-making process: (1) integrate a discussion of the debate surrounding the tax policy issue under study into the manuscript, (2) offer detailed interpretations and implications of the research results, (3) proffer normative statements based on the empirical evidence, (4) provide a synopsis of the manuscript’s contribution to the policy debate via a structured abstract, and (5) utilize additional communication channels to increase the visibility of the academic research to those interested in tax policy.

The Tax Policy Debate: Increasing the Policy Impact of Academic Tax Accounting Research

ABSTRACTMotivationAcademic accounting journals publish research with potential policy implications; however, the published manuscripts are often not considered by policymakers. We argue that the academic research currently being produced by accountants can have an increased policy impact.ObjectiveOur objective is to discuss how the policy impact of the academic research currently being produced can be increased by effectively integrating, presenting, and disseminating information that is useful to policymakers.Contribution to the Academic LiteratureWe offer the following recommendations to increase the policy impact of academic research: (1) integrate a discussion of the debate surrounding the tax policy issue under study into the manuscript; (2) explicitly offer detailed interpretations and implications of the research results; (3) proffer normative statements based on the empirical evidence; (4) provide a synopsis of the manuscript's contribution to the policy debate via a structured abstract; and (5) utilize additional communication channels to increase the visibility of the academic research to those interested in tax policy.Contribution to Decision MakersThe recommendations offered in this paper can help to increase the probability that the academic tax accounting research currently being produced is both directly useful and effectively disseminated to those interested in the tax policymaking process.

Does the Financial Crisis Create Opportunities for Taxing Wealth? A Study of Tax Policy Debates in the United Kingdom

Taxing wealth is an important part of tax policy debates today. The prospect though for taxing wealth seems to be bleak. But does the financial crisis create opportunities for taxing wealth? The financial crisis might change debates by acting as a shock to the tax policy process and boost political arguments for taxing wealth. This article explores whether the financial crisis has such an impact by looking at tax policy debates in the United Kingdom. The article looks at examples of three main ways of taxing wealth, namely, proposals for an inheritance tax, mansion tax and capital gains tax. This article argues that the financial crisis has an impact on political debates but that its impact is uneven. The financial crisis provides a greater boost for a mansion tax idea over inheritance tax or capital gains tax. However, political arguments for taxing wealth are refracted by other factors such as lobbying by vested interests.

Abbau der kalten Progression: nüchterne Analyse geboten

Die Forderung nach einem Abbau der sogenannten kalten Progression im Einkommensteuertarif ist zu einem Dauerbrenner in der steuer- und finanzpolitischen Reformdebatte geworden. Doch womit wird diese Forderung eigentlich begrundet? Welche Belastungen gehen tatsachlich von der kalten Progression aus? Wie haben sie sich im Zeitablauf entwickelt und wie sind sie verteilt? Besteht tatsachlich ein akuter Entlastungsbedarf? Nach einer eingehenden Analyse melden die Autoren daran erhebliche Zweifel an.

Toward obtaining a consistent estimate of the elasticity of taxable income using difference-in-differences

The elasticity of taxable income (ETI) is a central parameter for tax policy debates. This paper shows that mean reversion prevents most estimators employed in the literature from obtaining consistent estimates of the ETI. A new method is proposed that will resolve inconsistency due to mean reversion under testable assumptions regarding the degree of serial correlation in the error term. Using this procedure, I estimate an ETI of 0.858, which is about twice as large as the estimates found in the most frequently cited paper on this subject [13]. The corresponding elasticity of broad income is 0.475.

The Future of the Irish Corporation Tax Regime

In recent months, the Irish corporate tax regime has featured prominently in international tax policy debates, especially within the context of European tax reforms, high-profile corporate earnings reports and multinational investment flows changes.As financial repression sweeps across the OECD member states in the wake of the Great Recession and the sovereign debt crises, this debate is far from over.

Where the Money Really Went: A New Understanding of the AJCA Tax Holiday

International tax policy debate has been informed by a belief based on prior research that, notwithstanding legal prohibitions, shareholder payouts in 2005 accounted for $0.60-$0.92 per dollar repatriated under the AJCA tax holiday. I analyze total payouts that year and prove that this is false. Additionally, I estimate actual spending changes using firm-by-firm constrained regressions over a 5-year post-holiday window. Top-20 repatriators (56% of all repatriated cash) spent heterogeneously, with $0.72 per repatriated dollar associated with AJCA-permissible uses, including cash acquisitions ($0.49), debt reductions ($0.10), and R&D ($0.09). For smaller repatriators, $0.59 per dollar was associated with permissible uses.

Engaging students in the politics of tax policy: The tax attitudes survey project

► We introduce the Tax Attitudes Survey Project, an active learning exercise. ► Students gain an understanding of factors underlying the politics of tax policy. ► The project also provides an introduction to academic empirical research. Among other influences, the tax system of a democratic government reflects the many and varied attitudes, perceptions and values of its citizens. Understanding the determinants of attitudes and perceptions about the tax system is fundamental to understanding the dynamics and limitations of a tax system created by political processes. This paper introduces the Tax Attitudes Survey Project (TASP), which gives undergraduate students a hands-on introduction to empirical research through which they can gain a rich understanding of some of the factors, such as taxpayer attitudes and perceptions, underlying the politics of current tax-policy debates.

The Case Against Foreign Tax Credits

In international tax policy debate, it is usually assumed that, if one chooses not to exempt residents’ foreign source income, the preferred system would offer foreign tax credits. This assumption is mistaken, given the bad incentives created by the credits’ marginal reimbursement rate (MRR) of 100 percent and the unpersuasiveness of common rationales for granting them, such as those based on aversion to ‘‘double taxation’’orsupport forcapital exportneutrality.While taxingforeign source income at the full domestic rate with only deductions for foreign taxes would overtaxoutboundinvestment,atleast in principal creditability is dominatedbya burdenneutral shift to deductions plus a reduced tax rate for such income. And even if such a shift is unfeasible or unwise, the incentive problems resulting from a 100 percent MRR for foreign taxes paid may illuminate various more practical tax issues, such as the merits of (1) shifting to an exemption system,which features implicit deductibility, and (2) various proposed reforms, such as removing disincentives in subpart F for foreign tax planning by U.S. multinationals.

The Case Against Foreign Tax Credits

In international tax policy debate, it is usually assumed that, if one chooses not to exempt residents’ foreign source income, the preferred system would offer foreign tax credits. This assumption is mistaken, given the bad incentives created by the credits’ marginal reimbursement rate (MRR) of 100 percent and the unpersuasiveness of common rationales for granting them, such as those based on aversion to “double taxation” or support for capital export neutrality. While taxing foreign source income at the full domestic rate with only deductions for foreign taxes would over-tax outbound investment, at least in principle creditability is dominated by a burden-neutral shift to deductions plus a reduced tax rate for such income. And even if such a shift is unfeasible or unwise, the incentive problems resulting from a 100 percent MRR for foreign taxes paid may illuminate various more practical tax issues, such as (1) the merits of shifting to an exemption system, which features implicit deductibility, and (2) the merits of various proposed reforms, such as removing disincentives in subpart F for foreign tax planning by U.S. multinationals.

Theorizing the Charitable Tax Subsidies: The Role of Distributive Justice

Distributive justice plays a starring role in many fundamental tax policy debates, from marginal rate structure to choice of base to propriety of wealth transfer taxes. In contrast, current tax scholarship on charitable tax subsidies generally either ignores or explicitly disavows distributive justice concerns. Instead, it focuses on efficiency and pluralism-enhancing advantages of having charities provide public goods instead of or in addition to government. While identifying these advantages is a necessary and important contribution to our understanding of charitable giving policy, avoidance of distributive justice concerns ignores very purpose of charity: voluntary redistribution. After all, it's called charitable deduction, not public goods deduction. As a result, current body of work on charitable tax subsidies is incomplete: It purposely under-theorizes the good in order to avoid making value judgments about which projects should be subsidized. Although this sounds appealing, completely avoiding such judgments is both impossible and counter-productive. Current scholarship thus over under-theorizes good, creating confusion about charitable tax subsidies in both theory and practice. Explicitly addressing distributive justice - in addition to pluralism and efficiency - will enhance our understanding of subsidies for three reasons. First, existing scholarship - which generally ignores distributive justice issues - is incomplete and inconsistent for so doing. It is incomplete because it does not adequately identify which projects deserve a subsidy; it is inconsistent because it implicitly contains value judgments that have distributive justice implications but that are unacknowledged (and often disavowed) by their proponents. Second, popular criticisms of charitable tax subsidies raise distributive justice issues that have not been adequately addressed. And lastly, law governing charitable tax subsidies is itself confused on role of distributive justice. Extending our understanding of subsidies in this manner has three benefits. First, it will help efficiency- and pluralism-minded scholars better address how to structure tax subsidies to best promote those benefits. Second, a better understanding of distributive justice will help us assess existing justice-related criticisms of subsidies. And lastly, because our society currently spends a great deal of resources subsidizing charity, such a discussion will help us allocate our resources in a more systematic fashion.

Taxing ourselves: a citizen's guide to the debate over taxes

As Albert Einstein may or may not have said, hardest thing in the world to understand is the income tax. Indeed, to follow the debate over tax reform, the interested citizen is forced to choose between misleading sound bites and academic treatises. Taxing Ourselves bridges the gap between the two by discussing the key issues clearly and without a political agenda: Should the federal income tax be replaced with a flat tax or sales tax? Should it be left in place and reformed? Can tax cuts stimulate the economy, or will higher deficits undermine any economic benefit? Authors and tax policy experts Joel Slemrod and Jon Bakija lay out in accessible language what is known and not known about how taxes affect the economy, offer guidelines for evaluating tax systems, and provide enough information to assess both the current income tax system and the leading proposals to reform or replace it (including the flat tax and the consumption tax). The fourth edition of this popular guide has been extensively revised to incorporate the latest information, covering such recent developments as the Bush administration's tax cuts (which expire in 2011) and the alternatives proposed by the President's Advisory Panel on Federal Tax Reform. Slemrod and Bakija provide us with the knowledge and the tools -- including an invaluable voter's guide to the tax policy debate -- to make our own informed choices about how we should tax ourselves.

The Future of Tax Research: From an Accounting Professor's Perspective

I provide some suggestions for future research in the empirical accounting tax area. These suggestions repeat and build on the suggestions in Shackelford and Shevlin (2001). I also provide references to some research that I consider to be excellent examples of the points I wish to make. I think there are still many interesting questions to be examined, provided they are linked to some broad-based theory that connects results across a variety of research questions and research designs. I also think we (or some of the more senior faculty) might profitably consider entering into the tax policy debate by proffering normative statements based on our research.

Reformoptionen der Familienbesteuerung

Summary The aging of the population in Germany has led to growing concerns among politicians about the economic situation of households with children. This is also reflected in the recent tax policy debate on reforming the taxation of families and married couples. The purpose of this paper is threefold. We use a micro­simulation approach to analyse how various reforms of family taxation would affect the incomes of families compared to singles and married couples without children. Moreover, we address the distributional effects across different income deciles. Finally, we quantify tax revenue effects as well as possible consequences for labour supply. We focus on limited real income splitting systems. The simulation results show that limited real income splitting produces rather moderate vertical distributional effects, compared e.g. with the joint family income splitting of the French type. Furthermore real income splitting would lower the marginal tax rate on the second earner’s income, creating incentives to take up employment. It would also generate additional tax revenue.

Economic effects of VAT reforms in Germany

In the tax policy debate, differentiation of value-added taxes (VAT) is often justified by distributional concerns. Our quantitative analysis for Germany indicates that such concerns are misplaced. We find that the abolition of VAT differentiation has only negligible redistributive effects. Instead, reduced VAT rates are found to act as industry-specific subsidies. Whereas the overall welfare effects of pure VAT reforms are very small, a revenue-neutral introduction of a harmonized VAT combined with reductions in the marginal income tax rates or social security contributions turns out to yield substantial welfare gains for all households.

Economic Effects of Vat Reform in Germany

In the tax policy debate, differentiation of value-added taxes is often justified by distributional concerns. Our quantitative analysis for Germany indicates that such concerns are misplaced. We find that the abolition of VAT differentiation has only negligible redistributive effects. Instead, reduced VAT are found to act as industry-specific subsidies. Whereas the overall welfare effects of pure VAT reforms are very small, a revenue-neutral introduction of a harmonised VAT combined with reductions in the marginal income tax rates or social security contributions turns out to produce substantial welfare gains for all households.

Moving to Territoriality? Implications for the United States and the Rest of the World

This paper reviews the tax policy debate in the United States on the move of the corporation tax from its present worldwide basis to a territorial basis, and considers the implications for the United States and the rest of the world. It finds that there is no clear view on whether the move would significantly benefit the United States. Such a move, however, could have significant implications for the rest of the world in terms foreign direct investment (FDI) from the United States, the intensity of tax competition, and tax revenues.

Moving to Territoriality? Implications for the United States and the Rest of the World

This paper reviews the tax policy debate in the United States on the move of the corporation tax from its present worldwide basis to a territorial basis, and considers the implications for the United States and the rest of the world. It finds that there is no clear view on whether the move would significantly benefit the United States. Such a move, however, could have significant implications for the rest of the world in terms foreign direct investment (FDI) from the United States, the intensity of tax competition, and tax revenues.

U.S. Tax Reform: An Overview of the Current Debate and Policy Options

In the context of the current tax policy debate in the United States, this paper reviews and discusses some of the main recurrent themes, as well as some of the most important tax reform proposals put forward over the past two decades. It finds that although there seems to be widespread agreement that the current tax system is too complex, unfair, and distortionary, little or no consensus exists on how best to improve it.

U.S. Tax Reform: An Overview of the Current Debate and Policy Options

In the context of the current tax policy debate in the United States, this paper reviews and discusses some of the main recurrent themes, as well as some of the most important tax reform proposals put forward over the past two decades. It finds that although there seems to be widespread agreement that the current tax system is too complex, unfair, and distortionary, little or no consensus exists on how best to improve it.