The Experts below are selected from a list of 360 Experts worldwide ranked by ideXlab platform
Joel Slemrod - One of the best experts on this subject based on the ideXlab platform.
-
the economics of Corporate Tax selfishness
National Tax Journal, 2004Co-Authors: Joel SlemrodAbstract:This paper offers an economics perspective on Tax eva- sion and abusive avoidance done by corporations. It fi rst reviews what is known about the extent and nature of Corporate Tax noncom- pliance and the resources devoted to enforcement. It then addresses the supply side of aggressive Corporate Tax planning—the industrial organization of the Tax shelter industry—as well as the demand for Corporate Tax evasion and abusive avoidance, focusing on how the standard Allingham-Sandmo approach to Tax evasion needs to be modifi ed when applied to public corporations. It then discusses the implications of a supply-and-demand approach for the analysis of the incidence and effi ciency cost of Corporate income Taxation, and the very justifi cation for a separate Tax on corporation income. Along the way it addresses policy proposals aimed at increased disclosure of Corporate Tax activities to both the IRS and to the public.
-
the economics of Corporate Tax selfishness
Social Science Research Network, 2004Co-Authors: Joel SlemrodAbstract:This paper offers an economics perspective on Corporate Tax noncompliance. It first reviews what is known about the extent and nature of Corporate Tax noncompliance and the resources devoted to enforcement. It then addresses the supply of Corporate noncompliance -- the industrial organization of the Tax shelter industry -- as well as the demand for Corporate Tax noncompliance, focusing on how the standard Allingham-Sandmo approach needs to be modified when applied to public corporations. It then discusses the implications of a supply-and-demand approach for the analysis of the incidence and efficiency cost of Corporate income Taxation, and the very justification for a separate Tax on corporation income. Along the way it addresses policy proposals aimed at increased disclosure of Corporate Tax activities to both the IRS and to the public.
-
Corporate Tax evasion with agency costs
Social Science Research Network, 2004Co-Authors: Keith J Crocker, Joel SlemrodAbstract:This paper examines Corporate Tax evasion in the context of the contractual relationship between the shareholders of a firm and a Tax manager who possesses private information regarding the extent of legally permissible reductions in Taxable income, and who may also undertake illegal Tax evasion. Using a costly state falsification framework, we characterize formally the optimal incentive compensation contract for the Tax manager and, in particular, how the form of that contract changes in response to alternative enforcement policies imposed by the Taxing authority. The optimal contract may adjust to offset, at least partially, the effect of sanctions against illegal evasion, and we find a new and policy-relevant non-equivalence result: penalties imposed on the Tax manager are more effective in reducing evasion than are those imposed on shareholders.
-
are Corporate Tax rates or countries converging
Journal of Public Economics, 2004Co-Authors: Joel SlemrodAbstract:Abstract The statutory rate and effective Tax rate imposed on corporation income—as well as the dispersion of these rates—began to decline in the 1980s. Is this due to changes in the domestic determinants of Corporate Taxation or increases in international pressures for Tax competition? This paper finds clear evidence that the Corporate Tax rate is insulated from a country's revenue needs: across countries, there is no association of the expenditure–GDP ratio with the Corporate statutory rate and only weak evidence of a positive association with the average rate. There is suggestive, but not definitive, evidence that the domestic role of the Corporate Tax as a backstop to the individual income Tax is important: across countries, there is indeed a strong association between the top individual rate and the top statutory Corporate rate. There is intriguing evidence about the role of international competitive pressures on Corporate Taxation. Measures of openness are negatively associated with statutory Corporate rates, although not with revenues collected as a fraction of GDP. Strikingly, larger, more trade-intensive countries do collect more Corporate Tax, but this may be because these countries are more attractive venues for investment.
-
public disclosure of Corporate Tax return information accounting economics and legal perspectives
National Tax Journal, 2003Co-Authors: David Lenter, Joel Slemrod, Douglas A ShackelfordAbstract:This paper offers an overview of the issues raised by disclosure of Corporate Tax return information by providing current and historical perspectives from the fields of accounting, economics, and law. It reaches a number of conclusions. First, we are concerned that disclosure of the entire Corporate Tax return could cause companies to dilute the information content of these returns, hampering Tax enforcement, and might, even in diluted form, reveal proprietary information that could provide a competitive advantage to those companies that are not required to make such a disclosure. For this reason we do not support full disclosure. The case for considering limited public disclosure of Corporate Tax return information—revealing a small number of bottom–line items or an expanded reconciliation between Tax and book concepts of income—rests on the fact that it would contribute to the transparency of the Tax system by clarifying the Tax payments of corporations in and of themselves, relative to other corporations, and relative to the income they report on their financial statements. The greater transparency could have several beneficial effects. First, it could put pressure on legislators to improve the Tax system. Second, it could induce corporations to resist aggressive Tax reduction strategies if they fear that disclosure of their low Tax payments would trigger a negative consumer response; whether it would provoke negative investor response is less clear, as more transparency could conceivably induce a race to the bottom of low Tax liability. Finally, it could contribute to better functioning of financial markets if it sheds new light on the information presented in financial statements. We find the case for limited disclosure to be compelling enough that we look forward to the next step of considering the best form of disclosure and the details of its implementation.
Michael P Donohoe - One of the best experts on this subject based on the ideXlab platform.
-
financial derivatives in Corporate Tax avoidance a conceptual perspective
Journal of The American Taxation Association, 2015Co-Authors: Michael P DonohoeAbstract:ABSTRACT: Financial derivatives play an increasingly common role in Corporate Tax avoidance. This paper takes a descriptive approach to answer the fundamental, yet underexplored, questions of why derivatives are useful for Corporate Tax avoidance and how they fulfill this objective. To evaluate why, I develop and discuss a simple framework of research, practical issues, and anecdotes about derivatives-based Tax avoidance. I then provide unique insight into how derivatives reduce Taxes by discussing the complex transaction-level detail of two derivatives-based Tax-planning strategies. Finally, I identify potential issues that might be addressed in future research. Overall, by discussing the concepts and mechanics of derivatives-based Tax avoidance, this study serves as a prologue to extant and future research on the topic. JEL Classifications: G32, H25, M40
-
risky business the prosopography of Corporate Tax planning
National Tax Journal, 2014Co-Authors: Michael P Donohoe, Gary A Mcgill, Edmund OutslayAbstract:We trace the history of Corporate Tax planning from a compliance-focused activity to a profit-enhancing endeavor to a risk management center. Tax directors of U.S. multinational corporations face unprecedented global pressures from Taxing jurisdictions seeking to increase their share of the enterprise’s worldwide Taxes. Increasingly, corporations must consider the risks that a Tax strategy will impose on them, not only in terms of potential lost revenue, but also in terms of reputation and market share. We discuss the components of Tax risk management in today’s global environment and speculate how future Corporate Tax planning will change in light of the Organisation for Economic Co-operation and Development Base Erosion and Profit Shifting project.
-
risky business the prosopography of Corporate Tax planning
National Tax Journal, 2014Co-Authors: Michael P Donohoe, Gary A Mcgill, Edmund OutslayAbstract:We trace the history of Corporate Tax planning from a compliance-focused activity to a profit-enhancing endeavor to a risk management center. Tax directors of U.S. multinational corporations face u...
-
the economic effects of financial derivatives on Corporate Tax avoidance
2014Co-Authors: Michael P DonohoeAbstract:This study estimates the Corporate Tax savings from financial derivatives. I document a 3.6 and 4.4 percentage point reduction in three-year current and cash effective Tax rates (ETRs), respectively, after a firm initiates a derivatives program. The decline in cash ETR equates to $10.69 million in Tax savings for the average firm and $4.0 billion for the entire sample of 375 new derivatives users. Of these amounts, $8.75 million and $3.3 billion, respectively, are incremental to Tax savings that theory suggests are a byproduct of risk management. Collectively, these findings provide economic insight into the prevalence of derivatives-based Tax avoidance.
-
financial derivatives in Corporate Tax avoidance a conceptual perspective
Social Science Research Network, 2014Co-Authors: Michael P DonohoeAbstract:Financial derivatives play an increasingly common role in Corporate Tax avoidance. This paper takes a descriptive approach to answer the fundamental, yet under explored, questions of why derivatives are useful for Corporate Tax avoidance and how they fulfill this objective. To evaluate why, I develop and discuss a simple framework of research, practical issues, and anecdotes about derivatives-based Tax avoidance. I then provide unique insight into how derivatives reduce Taxes by discussing the complex transaction-level detail of two derivatives-based Tax planning strategies. Finally, I identify potential issues that might be addressed in future research. Overall, by discussing the concepts and mechanics of derivatives-based Tax avoidance, this study serves as a prologue to extant and future research on the topic.
Ryan J Wilson - One of the best experts on this subject based on the ideXlab platform.
-
expected economic growth and Corporate Tax planning
2018Co-Authors: Sean T Mcguire, Steven Savoy, Ryan J WilsonAbstract:This study investigates whether expected economic growth is associated with Corporate Tax planning. We predict that higher expected economic growth increases the net present value of Tax planning opportunities and thus increases investment in Tax planning. Consistent with our prediction, we find that one-year ahead cash ETRs are negatively associated with GDP growth forecasts. A series of cross-sectional analyses show this association is more pronounced for firms that are highly cyclical, financially constrained, and more likely to experience a shift in their Tax clientele. In supplemental analysis, we find that expected economic growth only influences firms' investment strategies that directly reduce Tax expense on the financial statements while current macro-level financial constraints influence firms' investment in strategies that defer cash Taxes paid. Our study highlights that growth expectations at the macroeconomic level are an important determinant of time series variation in Corporate Tax planning.
-
perspectives on Corporate Tax planning observations from the past decade
Journal of The American Taxation Association, 2018Co-Authors: Jaron H. Wilde, Ryan J WilsonAbstract:ABSTRACT Interest in Corporate Tax planning has accelerated in recent years as a combination of political, economic, and technological factors have fueled the public's awareness of Corporate Tax ac...
-
equity risk incentives and Corporate Tax aggressiveness
Journal of Accounting Research, 2012Co-Authors: Sonja Olhoft Rego, Ryan J WilsonAbstract:This study examines equity risk incentives as one determinant of Corporate Tax aggressiveness. Prior research finds that equity risk incentives motivate managers to make risky investment and financing decisions, since risky activities increase stock return volatility and the value of stock option portfolios. Aggressive Tax strategies involve significant uncertainty and can impose costs on both firms and managers. As a result, managers must be incentivized to engage in risky Tax avoidance that is expected to generate net benefits for the firm and its shareholders. We predict that equity risk incentives motivate managers to undertake risky Tax strategies. Consistent with this prediction, we find that larger equity risk incentives are associated with greater Tax risk and the magnitude of this effect is economically significant. Our results are robust across four measures of Tax risk, but do not vary across several proxies for strength of Corporate governance. We conclude that equity risk incentives are a significant determinant of Corporate Tax aggressiveness.
-
an examination of Corporate Tax shelter participants
The Accounting Review, 2009Co-Authors: Ryan J WilsonAbstract:ABSTRACT: Recent evidence suggests that Corporate Tax shelters have become important Corporate instruments for reducing Tax burden. Based on a sample of identified Tax shelter participants, I develop a profile of the type of firm that likely engages in Tax sheltering. The model detects Tax shelter participants through the use of variables predicted to be either affected by or associated with Tax sheltering. I find that firms actively engaged in Tax sheltering exhibit larger ex post book‐Tax differences and more aggressive financial reporting practices. Using this model of Tax shelter firm characteristics, I identify a broad sample of predicted Tax shelter firms from the population of firms. I then examine whether Tax sheltering is associated with wealth creation for shareholders or with managerial opportunism. I find that active Tax shelter firms with strong Corporate governance exhibit positive abnormal returns. This finding is consistent with Tax sheltering being a tool for wealth creation in well‐gover...
-
an examination of Corporate Tax shelter participants
Social Science Research Network, 2008Co-Authors: Ryan J WilsonAbstract:Recent evidence suggests that Corporate Tax shelters have become important Corporate instruments for reducing Tax burden. Based on a sample of identified Tax shelter participants, I develop a profile of the type of firm that likely engages in Tax sheltering. The model detects Tax shelter participants through the use of variables predicted to be either affected by or associated with Tax sheltering. I find that firms actively engaged in Tax sheltering exhibit larger ex post book-Tax differences and more aggressive financial reporting practices. Using this model of Tax shelter firm characteristics, I identify a broad sample of predicted Tax shelter firms from the population of firms. I then examine whether Tax sheltering is associated with wealth creation for shareholders or with managerial opportunism. I find that active Tax shelter firms with strong Corporate governance exhibit positive abnormal returns. This finding is consistent with Tax sheltering being a tool for wealth creation in well-governed firms.
Dermot Leahy - One of the best experts on this subject based on the ideXlab platform.
-
Corporate Tax games with cross border externalities from public infrastructure
Economic Inquiry, 2018Co-Authors: Gerda Dewit, Kate Hynes, Dermot LeahyAbstract:We construct a model of Corporate Tax competition in which governments also use public infrastructure investment to attract foreign direct investment, thus enhancing their Tax bases. In doing so, we allow for cross-border infrastructural externalities. Depending on the externality, governments are shown to strategically over- or underinvest in infrastructure. We also examine how Tax cooperation influences investment in infrastructure and find that welfare may be lower under Tax cooperation than under Tax competition; this is the case when infrastructure is very effective in raising the Tax base and generates a large negative cross-border externality. (JEL F23, H40)
-
Corporate Tax games with crossâborder externalities from public infrastructure
Economic Inquiry, 2018Co-Authors: Gerda Dewit, Kate Hynes, Dermot LeahyAbstract:We construct a model of Corporate Tax competition in which governments also use public infrastructure investment to attract foreign direct investment, thus enhancing their Tax bases. In doing so, we allow for crossâborder infrastructural externalities. Depending on the externality, governments are shown to strategically overâ or underinvest in infrastructure. We also examine how Tax cooperation influences investment in infrastructure and find that welfare may be lower under Tax cooperation than under Tax competition; this is the case when infrastructure is very effective in raising the Tax base and generates a large negative crossâborder externality. (JEL F23, H40)
-
Corporate Tax games with international externalities from public infrastructure
2014Co-Authors: Gerda Dewit, Kate Hynes, Dermot LeahyAbstract:We construct a model of Corporate Tax competition in which governments also use public infrastructural investment to attract foreign direct investment, thus enhancing their Tax bases. In doing so, we allow for inter-regional infrastructural externalities. Depending on the externality, governments are shown to strategically over- or under-invest in infrastructure. We examine how Tax cooperation influences investment in infrastructure and find that welfare may be lower under Tax cooperation than under Tax competition; this is, in fact, the case when infrastructure is sufficiently effctive in raising the Tax base and generates a sufficiently large negative interregional externality
Kimberly A Clausing - One of the best experts on this subject based on the ideXlab platform.
-
the effect of profit shifting on the Corporate Tax base in the united states and beyond
Social Science Research Network, 2016Co-Authors: Kimberly A ClausingAbstract:This paper estimates the effect of profit shifting on Corporate Tax base erosion for the United States. Using Bureau of Economic Analysis survey data on U.S. multinational corporations over the period 1983 to 2012, the analysis estimates the sensitivity of foreign incomes to Tax burdens for major foreign direct investment destinations. Controlling for a host of other variables as well as country fixed effects, I find that Taxable income is very sensitive to Corporate Tax rates. Estimates of Tax sensitivity are used together with data on reported foreign income to calculate how much “extra” income is booked in low-Tax countries due to profit shifting; I then estimate what the Tax base would be in the United States without profit shifting. I find that profit shifting is likely costing the U.S. government between $77 and $111 billion in Corporate Tax revenue by 2012, and these revenue losses have increased substantially in recent years. These findings are consistent with the stylized facts about large quantities of income booked in Tax havens. I also undertake a speculative extension of this analysis to other countries, finding that Corporate Tax base erosion is likely a large problem in countries that do not have low Tax rates. The paper concludes with a discussion of suggested reforms.
-
the effect of profit shifting on the Corporate Tax base in the united states and beyond
National Tax Journal, 2016Co-Authors: Kimberly A ClausingAbstract:This paper estimates the effect of profit shifting on Corporate Tax base erosion for the United States, using Bureau of Economic Analysis survey data on U.S. multinational corporations during 1983 ...
