Taxable Revenue Research Articles

Cannabis Licensing and Municipal Revenues

Municipal license policy has shaped the early roll-out and business outcomes of Proposition 64. Several stakeholders identify license availability as a key constraint to future cannabis market growth in California. Recent studies explore local cannabis licensing policy; however, key questions remain around municipal revenues, business location, and the role of supporting cannabis business ownership. Our paper explores the impacts of cannabis licensing on business locations and municipal taxable revenues. We use publicly-available Department of Cannabis Control licensing data to examine business locations using GIS analysis, conduct a regression analysis of city-level licenses and Department of Tax and Fee Administration revenues across California, and forecast potential municipal taxable revenues in South Bay Los Angeles. We find that licensed cannabis businesses appear to develop in Los Angeles County and are located close to borders of cities not issuing licenses, in areas of favorable zoning, in densely populated locations, and areas with higher poverty and minority populations. Our regression analysis suggests that city population drives municipal taxable revenue, indicating that business follows demand.

Virtual Currencies: Estimating the Revenue from Taxing Bitcoin in Light of the US Experience and Proposing a Method of Taxation

The aim of this study is to estimate the tax revenue of Bitcoin that could have been generated between 2014 and 2017, in the United States, which is the first state in terms of trading volume on online exchanges of Bitcoin in 2020. The authors hereby respond to the question whether the taxation of such a currency can constitute a supplementary budget resource for states whose public expenditures are rising especially after the COVID-19 pandemic. This study is the first using Bitcoin’s exchange rate to assess taxable revenue based on the supply-and-demand law of Bitcoin and USD. The authors made estimates based on the observation and analysis of the Bitcoin/USD exchange rate. The resulting estimates show that taxing Bitcoin can generate an important tax resource. Given that no consensus has been reached by worldwide authorities on the taxation of such a resource, the authors set forth a possible global solution.

The geography of US homeownership tax expenditures

US homeowners receive income tax deductions for mortgage interest payments and state and local property taxes, pay no income tax on their home's imputed rental income, and may exclude most of the capital gains earned from a home sale. This paper characterizes the geographic distribution of the tax expenditures from these tax preferences using a new method that exploits household-level microdata from the 2019 Census Public Use Microdata Sample to simulate homeownership tax expenditures at the Public Use Microdata Area level. I estimate that in the 2018 tax year, $226.05 billion in taxable revenue was lost to the mortgage interest deduction ($28.20 billion), the property tax deduction ($9.51 billion), the exclusion of net imputed rental income ($134.82 billion), and the partial exclusion of housing-related capital gains ($53.52 billion). Large metropolitan areas and neighborhoods with high housing prices receive subsidies in excess of the cost of funding homeowner tax preferences, while the burden of homeowner tax preferences falls heavily on rural areas. If federal income tax law reverted to what existed just prior to the 2017 Tax Cuts and Jobs Act, these geographic disparities would be exacerbated.

Day 1 of the Spanish Digital Services Tax: And Now What? A Wave of Tax Policy, Legal Interpretation and Compliance Challenges

The Spanish Digital Services Tax came into force on 16 January 2021 after a long and turbulent journey with the ambition to serve as an interim measure pending the long-awaited multilateral solution. This article aims to critically analyse the main features of the tax and further reveal and assess the primary challenges that its implementation and day-to-day management are likely to prompt, specifically: the vague delimitation of some of its provisions with the subsequent damage to legal certainty, the (almost) unfeasible access to the data required to calculate the relevant taxable revenues that render the tax ultimately unworkable, and the tax planning opportunities that may be exploited by taxpayers to minimize their tax liabilities, inter alia. Finally, the doubtful consistency between the design of the tax and the alleged tax policy guideline behind it (i.e., the ‘value creation’ principle) is assessed. Ultimately, the question remains of whether this path is genuinely worth exploring. Are we really willing to endanger fundamental principles of the rule of law for a temporary patch targeting a few multinationals? Digital services tax, digital economy, value creation, user data, social media, online advertising, sharing economy

Allocating taxable income for provincial corporate income taxation in Canada, 2015-2017: practice and analysis

Canada is one of the few countries in the world where an intra-country formula allocation (FA) mechanism plays an important role in the taxation of corporate income by sub national governments, that is provinces. This paper presents and analyses information prepared for its authors by CRA on the allocation of taxable income between provinces for three years: 2015, 2016 and 2017. Profits allocated using the FA approach account for about one third of taxable income. The Income tax regulations contain one general formula and nine sector specific formulas, the general one is used to allocate more than 85% of revenues between provinces. The second most important one pertains to the banking sector. The formulae used by the CRA date back mainly to 1947 and have applied to all provinces since 1960.They have not been the object of much analysis. In particular the use of a two factor formula with weights of 50% for each of payroll and revenues has not been much discussed. The paper thus presents both the existing distribution of taxable revenues between provinces and simulates what it would be if one of alternative formulas either used in the United States or under examination in Europe was used. The three factor formula would change the distribution of taxable income significantly between provinces

Day 1 of the Spanish Digital Services Tax: And Now What? A Wave of Tax Policy, Legal Interpretation and Compliance Challenges

The Spanish Digital Services Tax came into force on 16 January 2021 after a long and turbulent journey with the ambition to serve as an interim measure pending the long-awaited multilateral solution. This article aims to critically analyze the main features of the tax and further reveal and assess the primary challenges that its implementation and day-to-day management are likely to prompt, specifically: the vague delimitation of some of its provisions with the subsequent damage to legal certainty, the (almost) unfeasible access to the data required to calculate the relevant taxable revenues that render the tax ultimately unworkable, and the tax planning opportunities that may be exploited by taxpayers to minimize their tax liabilities, inter alia. Finally, the doubtful consistency between the design of the tax and the alleged tax policy guideline behind it (i.e., the ‘value creation’ principle) is assessed. Ultimately, the question remains of whether this path is genuinely worth exploring. Are we really willing to endanger fundamental principles of the rule of law for a temporary patch targeting a few multinationals?

Vessel Financing Fund and the Survival of Local Ship Owners/operators in Rivers State, Nigeria

This study examined the relationship between vessel financing fund and the survival of local ship owners/operators in Rivers State. Vessel financing fund was used as the independent variable as well as the dimension. The variables used in this study to measure the survival of local ship owners/operators in Rivers State (dependent variable) included increase in employment by local ship operators and taxable revenue to government by local ship operators. The study population consisted of 35 indigenous ship operating companies in Rivers State. However, the study sampled 4 staff from each of the companies (140) and validly used 133 of the respondents (95%response rate) for the data analysis. The study used research instrument of questionnaire orientation to elicit information. The study adopted the descriptive and inferential statistical techniques in the assessment of the operational relationship between the variables and tested the six hypotheses with Pearson Product Moment Correlation Coefficient (r). The study found that NIMASA as regulatory authority declines to approve permits for foreign vessels; that shipping companies are not satisfied with the implementation of Nigerian Cabotage Act and NIMASA’s conduct, actions, decisions and policies do not meet the expectations of local ship owners/operators. The study found that there are duplications in vessel registration process with NIMASA. Most vessels that fly Nigerian flags, which is an indication of compliance to the regime still go for Temporary Importation permit with Nigerian Customs Services, which is a clear attestation that no customs duty is paid. From the test of the hypotheses in this study it is evident and conclusive that vessel financing fund has positive and significant relationship with increase in employment of local ship owners/operators and taxable revenue to government by local ship operators in River State. The study therefore, recommends that government should intensify its efforts by ensuring the approval of the proposal on a fiscal incentive programme to encourage indigenous participation in shipping, submitted by NIMASA. This will encourage more investment in shipping, enhance capacity building, lead to improved infrastructural facilities in the existing shipyards and enhance the opportunities of the indigenous operators to lift available cabotage cargoes, especially in the oil and gas industry.

BAT Signals from Asset Markets: Estimating the U.S. Dollar Response to a Destination-Based Cash-Flow Tax

In early 2017, there was substantial discussion about changing the U.S. corporate tax system to a destination-based cash-flow tax (DBCFT). The DBCFT proposal, also often referred to as a border-adjusted tax (BAT), would exclude exports from taxable revenues and exclude imports from allowable deductions.

ANALISIS PERUBAHAN TARIF PENGHASILAN TIDAK KENA PAJAK (PTKP) TAHUN 2015 DAN TAHUN 2016 TERHADAP PENERIMAAN PAJAK PENGHASILAN (PPH) PASAL 21 DI KANTOR PELAYANAN PAJAK PRATAMA BITUNG

Tax is a compulsory payment to every citizen whose counterpart is not direct. In 2016 there is an Increase in the tariff of Non Taxable Revenue (PTKP). The increase of non-taxable income (PTKP) will be enjoyed by the people who work as employees/employees, and the Taxpayer Object Tax (WPOP) workers who have free and / or self-employed jobs because it will lower taxable income tax (PKP) taxpayers. However, the increase in PTKP has the potential to decrease income tax revenue. This study aims to evaluate the effect of PTKP changes on the acceptance of Income Tax Article 21 in KPP Pratama Bitung. The method used is qualitative descriptive method. The research results show that the non-taxable income (PTKP) experienced a 50% increase and this affects income tax revenue PPh) significantly. Expected to be able to do things to increase tax revenue from the income tax side of article 21. One of them is to adjust the limits of PTKP with the lowest salary / income of employees. In addition, the Tax Office of Bitung Pratama is also expected to provide continuous supervision and extension on taxpayers of individuals, bodies and treasurers of government offices concerning the awareness of their obligation to withhold tax on income tax on the employee or employees accordingly at the prevailing rate.Keywords: Non Taxable Income, Income Tax, Changes receipts

Tax efficiency, seigniorage and Central Bank Conservativeness

We analyse how conservative should an independent central bank be in an economy where the taxable revenue depends on the institutional quality. Initially, we propose an indicator of the degree of conservativeness of a central bank and, then, we characterise its optimal value. We find that the central bank has to be more conservative than the government, except with complete tax inefficiency. Furthermore, we show that the relationship between the optimal relative degree of conservativeness of the central bank and tax efficiency is affected by the volatility of supply shocks. Concretely, when these shocks are not important, the central bank should be less conservative if tax efficiency gets worse. However, this result may not hold when the shocks are relevant. Finally, we examine under which conditions the government would be willing to dedicate more efforts to improve tax efficiency.

When oceans attack: assessing the impact of hurricanes on localized taxable sales

We examine the impact of hurricanes in Florida on county-level taxable sales revenues. Conditional on the strength of the hurricane, within 6 months after a hurricane strikes a county, revenues decline as much as 17 %, whereas revenues in neighboring counties increase by upward of 17 % over that same time frame. This decline in revenue is found to be dependent on the commercial makeup of a hurricane-stricken county. Particular focus is given to tourism-related subsectors within the local economy. Finally, we show that along the pathways of hurricanes, initially hit counties face a more severe burden, ranging as high as a 33 % immediate decline in taxable revenues in 1 month for coastal counties. As the hurricane weakens, the direct impact is lessened; however, there is evidence of spillover damage in neighboring areas.

Effect of smoke-free legislation on Ticino gastronomy revenue

To provide evidence on the effects of smoke-free laws on gastronomy revenue in a European setting based on objective data. Damage to gastronomy revenue is a widely used argument against smoke-free legislation. Gastronomy revenue in Ticino is compared with the rest of Switzerland before and after Ticino banned smoking from gastronomy in April 2007, being the first (and at the time of the study only) Swiss canton to do that. The study uses breakdowns by cantons of taxable revenue of gastronomy branches and retailers (for comparison) provided by the Swiss tax authorities for the years 2005-2008. Revenues of restaurants and bars were not damaged by the Ticino smoke-free law. Decreases in Ticino happened before the smoke-free law came into effect. Evidence for night clubs is inconclusive. The absence of detrimental effects on restaurant and bar revenue corroborates the gist of research on the subject from other countries. The argument that the decline of bar and restaurant sales prior to the implementation of the ban might have occurred in anticipation of the new regulation is not considered tenable.

Economic evaluation of a 100% smoke-free law on the hospitality industry in an Argentinean province

To assess the economic impact of a 100% smoke-free law on bars and restaurants in an Argentinean province. We conducted a time series analysis of restaurant and bar revenues in the province of Santa Fe 31 months before and 29 months after the implementation of the 100% smoke-free environment law. The neighboring province of Entre Rios without smoking restrictions at the time of this study, was used as the control province. Average taxable revenues post-legislation in the province of Santa Fe as a whole and in the two most important cities were higher when compared to the total provincial revenue pre-legislation. No significant differences were observed with the total revenue from the province of Entre Rios. We found no statistically significant evidence that the 100% smoke-free environment legislation in the province of Santa Fe, Argentina, had a negative impact on the revenues of local bars and restaurants.

Determinants of the Taxable Activities of Nonprofit Organizations

Although nonprofit is often considered to be synonymous with tax-exempt, many nonprofit organizations earn revenues from unrelated taxable activities, and on average these taxable activities generate $1.5 million in revenues. Policymakers have expressed concern that the pursuit of unrelated taxable revenues can distract a nonprofit from its primary charitable mission. Our results show that nonprofits earn taxable revenues when the taxable activities produce a relatively higher return, the nonprofit itself is experiencing lower profitability, and donor aversion is lower. These results suggest that nonprofits will pursue specific types of unrelated taxable activities, and then only under certain circumstances, reducing concerns over mission drift caused by widespread nonprofit expansion into taxable markets.

Determinants of nonprofits’ taxable activities

Although nonprofit is often considered to be synonymous with tax-exempt, many nonprofit organizations earn revenues from unrelated taxable activities, and on average these taxable activities generate $1.5 million in revenues. Policymakers have expressed concern that the pursuit of unrelated taxable revenues can distract a nonprofit from its primary charitable mission. Our results show that nonprofits earn taxable revenues when the taxable activities produce a relatively higher return, the nonprofit itself is experiencing lower profitability, and donor aversion is lower. These results suggest that nonprofits will pursue specific types of unrelated taxable activities, and then only under certain circumstances, reducing concerns over mission drift caused by widespread nonprofit expansion into taxable markets.

Why Do Nonprofits Have Taxable Subsidiaries?

Nonprofit organizations operate taxable activities in two general ways: as unrelated businesses operated by the nonprofit or through controlled subsidiaries. Prior research and regulatory attention has focused on unrelated business activities, although taxable subsidiaries generate at least as much taxable revenue. We find that nonprofits place their taxable activities into subsidiaries when those taxable activities are relatively large, and when the taxable activities are relatively more risky. Nonprofits trade off possible benefits of the subsidiary form with the costs of reduced tax planning ability.

Franchise Fee Revenues after Video Competition: The 'Competition Dividend' for Local Governments

In response to federal efforts to reform the local cable franchise process, state and local governments have argued that proposed legislation will reduce local franchise fee revenues by at least $300 million per year. As demonstrated in this POLICY BULLETIN, however, the introduction of for multichannel video services promises to significantly increase gross industry revenues and therefore could substantially increase local franchise fee collections. Specifically, this POLICY BULLETIN finds that if wireline, local telephone company entry into the multichannel video industry is successful, then gross taxable revenues from the wireline multichannel video industry will increase by an estimated 30%. Commensurately, effective proentry video policies would allow the local franchise fee percentage cap to be lowered (or the revenue base narrowed) significantly without doing any harm to local government franchise collections. This POLICY BULLETIN estimates that a reduction in the franchise fee cap from 5% to 3.7% would be revenue neutral. However, this competition dividend will only occur if wireline entry happens and, therefore, reform of the cumbersome and anticompetitive video franchising process is crucial to ensuring that such entry occurs.

Saints, Stalwarts, and Slackers: State Financial Contributions to Welfare Reform

Considerable literature finds that spending levels are important predictors of poverty rates, both in the American states and in western European nations. Those jurisdictions with the most generous support programs generally have lower poverty rates. This article examines state Temporary Assistance for Needy Families (TANF) spending levels in relation to national norms, the spending ability of the state as predicted by their total taxable revenue base, and the state's poverty rate. The analysis shows enormous variation in state per capita TANF spending, with many states spending far less than the national mean and their fiscal capacity. Most of the low‐spending states have the fiscal ability to fund more vigorous programs but at optimal levels; some would still fall below the national mean. In return for improved funding, these states would be candidates for increased federal assistance. A few states with a high poverty rate and usually with large numbers of poor citizens are generous spenders, indicating that funding is one component of effective programs.

Fiscal Reform in Russia and the Transformation of Local Public Finance

The purpose of this paper is to evaluate the reforms of local public finance in Russia that have been carried out during the first term of the Putin administration from 2000 to 2003. The building processes for home rule and local pubic finance institutions in Russia started during the 1990s, although it was after 2000 that a comprehensive fiscal reforms focusing on municipalities ensued. Therefore, after a brief survey of the problems during the 1990s that caused reforms to be necessary, this work attempts to examine a“Program for the Development of Fiscal Federalism in the Russian Federation in the Period until 2005”that was introduced in 2001 and gave an orientation for reforms of intergovernmental fiscal relationship.The program tried to strengthen federal control over local public finances, by introducing uniform rule at federal level for the delegation of expenditure authority, revenue distribution, and intergovernmental transfers, that have to be applied to all levels of government. It also aimed at improving the efficiency of local public finances by strengthening the fiscal independence of the municipalities.As a result of the reforms, local government retained less taxable revenue source, causing them to depend more heavily on fiscal transfers from federal and regional government. This change imposed certain constraints on the expenditure patterns of local governments, and caused changes in the local public service systems; subsidies for housing and public utilities were reduced, while social assistance to residents was increased. However, the actual reform process did not necessarily embody the ideals of the program in the sense that did not strengthen the fiscal independence of the municipalities.It can be said that distinguishing feature of fiscal reforms under the Putin administration is an attempt to concentrate more fiscal resources within the federal budget while simultaneously strengthening political control over municipalities. And thus federal government tried to restructure the lax management of local public finances through reforms from above.

Nonprofit Taxable Activities, Production Complementarities, and Joint Cost Allocations

Nonprofit organizations earn both tax—exempt and taxable revenues. Nonprofits may have a natural aversion to engaging in ancillary activities and, as a result, taxable ventures need to provide higher returns than alternative investments. A nonprofits' ability to exploit production complementarities may increase the return to taxable activities and explain the extent to which it engages in taxable ventures. This paper uses tax return data to test the theory that complementarities encourage taxable activities. Complementarities can lower production costs and make it easier for a nonprofit to allocate joint costs from tax-exempt to taxable activities. I find support for both hypotheses.