American nonprofit organizations receive favorable tax treatment, including tax exemptions and tax-deductibility of contributions, in return for their devotion to charitable purposes and restrictions ...not to distribute profits. Recent efforts to extend some or all of these tax benefits to for-profit companies making social investments, including the creation of the new hybrid nonprofit/for-profit company form known as the Low-Profit Limited Liability Company, threaten to undermine the vitality of the nonprofit sector and the integrity of the tax system. Reform advocates maintain that the ability to compensate executives based on performance and to distribute profits when attractive investment opportunities are scarce makes for-profit entities more efficient than nonprofit counterparts. Offering more favorable tax treatment to for-profits engaging in charity would encourage greater charitable entrepreneur ship, the argument goes, and provide worthwhile competition for the nonprofit sector. As matters stand, however, nonprofits can and occasionally do reward executives with performance-based compensation, and their nondistribution rules impose no obligation to make subpar investments. The existing nonprofit sector is extremely competitive, and the charitable activities of for-profits already receive favorable tax treatment. Going further and offering socially active for-profits the tax benefits equivalent to those available currently to nonprofits would create opportunities for tax arbitrage by providing tax deductions to high-bracket donors and taxable income for lightly taxed recipients. The difficulty of policing lines between nonprofit and for-profit activities of the same business entities would entail significant administrative complexity and is unlikely ultimately to succeed. And even should it succeed, the costs of offering new tax benefits to far-profit charities include not only foregone tax revenues, but also spillover effects on the charitable activities of nonprofits.
Deferral of U.S. taxes on foreign source income is commonly characterized as a subsidy to foreign investment, as reflected in its inclusion among "tax expenditures "and occasional calls for its ...repeal. This paper analyzes the extent to which tax deferral and other policies inefficiently subsidize U.S. direct investment abroad. Investments are dynamically inefficient if they consistently generate less in returns to investors than they absorb in new investment funds. From 1982-2010, repatriated earnings from foreign affiliates exceeded net capital investments by $1.1 trillion in 2010 dollars, and from 1950-2010, repatriated earnings and net interest from foreign affiliates exceeded net equity investments and loans by $2.1 trillion in 2010 dollars. By either measure, cash flows received from abroad exceeded 160 percent of net investments, implying that foreign investment over these periods was dynamically efficient.
Discussions of U.S. Social Security reform invariably begin by noting the gloomy long-run projections presented in the Annual Report of the Board of Trustees of the Federal Old-Age and Survivors ...Insurance and Disability Insurance Trust Funds. For example, the 2004 report predicts (in its "intermediate" scenario) that the Social Security trust fund, formally known as the Old Age and Survivors Insurance (OASI) trust fund, will be empty and the program therefore unable to pay its full scheduled level of benefits for future years starting in 2044. If the Disability Insurance (DI) trust fund is included in the calculations with the Old Age and Survivors Insurance (OASI) trust fund, as is often done, the actuaries predicted in 2004 that the combined trust fund would be empty in 2042. In this symposium, the authors have agreed to focus their discussion on policies rather than actuarial assumptions by taking the intermediate forecasts of the 2004 Trustee's Report as the starting point for their discussion.
On the timeliness of tax reform Hines, James R
Journal of public economics,
04/2004, Letnik:
88, Številka:
5
Journal Article
Recenzirano
This paper analyzes efficient government reactions to unanticipated tax avoidance. Quickly reforming tax laws to reduce the effectiveness of new tax avoidance techniques prevents widespread adoption, ...but indirectly encourages the rapid development of new avoidance methods if prior users are permitted to retain their tax benefits. Tax reforms that immediately prevent new avoidance mean that innovators need not fear imitation by competitors, and cannot rely on copying the innovations of others. Such an activist reform agenda diverts greater resources into tax avoidance activity, and might thereby lead to a faster rate of tax base erosion, than would a less reactive government strategy. Efficient government policy therefore entails either the retroactive elimination of tax savings, with possible associated costs, or else a deliberate pace of tax reform in response to taxpayer innovation.
Higher corporate taxes reduce corporate business operations, replacing them with operations by noncorporate businesses that are risky and have undiversified ownership. This shift contributes to ...income dispersion, with effects so large that higher corporate taxes can increase income inequality even when the corporate tax burden falls entirely on capital owned disproportionately by the rich. Estimates suggest that the riskiness of U.S. noncorporate business increases by 12.3% the aggregate income of the top one percent, and that income dispersion created by a higher U.S. corporate tax rate offsets more than half of the distributional effects of reducing average returns to capital.
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