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Michael R Kinney - One of the best experts on this subject based on the ideXlab platform.
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political scrutiny and Tax Law compliance evidence from the american jobs creation act of 2004
Social Science Research Network, 2014Co-Authors: Jian Cao, Yunhao Chen, Roy Clemons, Michael R KinneyAbstract:The American Jobs Creation Act of 2004 (the Act) created a Tax holiday encouraging firms to repatriate foreign earnings and invest that capital in the United States. However, the Act did not require a direct tracing of the spending of repatriated funds; accordingly, repatriating firms could ignore the investment prescriptions of the Act since Tax regulators were provided no legally viable basis to pursue violations of the spending requirements. We use this event to provide evidence on the effect of political scrutiny on firms’ Tax Law compliance in a setting where regulatory enforcement plays essentially no role. Our findings suggest that repatriating firms facing greater levels of policymaker scrutiny, relative to other repatriating firms, exhibited greater compliance with the Act by increasing relative expenditures on permitted uses (R&D investment) and restraining expenditures on non-permitted uses. We also find that the spending patterns are different only for the group of high-scrutiny firms (i.e., there is a threshold effect). Our estimates imply that the repatriation Tax holiday induced, among such high-scrutiny firms alone, $0.41 of additional R&D spending per revenue dollar forgone by the Treasury under the Act. The evidence is generally consistent with the political cost hypothesis.
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political scrutiny and Tax Law compliance evidence from the american jobs creation act of 2004
Journal of The American Taxation Association, 2014Co-Authors: Jian Cao, Yunhao Chen, Roy Clemons, Michael R KinneyAbstract:ABSTRACT: The American Jobs Creation Act of 2004 (the Act [U.S. House of Representatives 2004]) created a Tax holiday encouraging firms to repatriate foreign earnings and invest that capital in the United States. However, the Act did not require a direct tracing of the spending of repatriated funds; accordingly, repatriating firms could ignore the investment prescriptions of the Act, since Tax regulators were provided no legally viable basis to pursue violations of the spending requirements. We use this event to provide evidence on the effect of political scrutiny on firms' Tax Law compliance in a setting where regulatory enforcement plays essentially no role. Our findings suggest that repatriating firms facing greater levels of policymaker scrutiny, relative to other repatriating firms, exhibited greater compliance with the Act by increasing relative expenditures on permitted uses (R&D investment) and restraining expenditures on nonpermitted uses. We also find that the spending patterns are different onl...
Jian Cao - One of the best experts on this subject based on the ideXlab platform.
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political scrutiny and Tax Law compliance evidence from the american jobs creation act of 2004
Social Science Research Network, 2014Co-Authors: Jian Cao, Yunhao Chen, Roy Clemons, Michael R KinneyAbstract:The American Jobs Creation Act of 2004 (the Act) created a Tax holiday encouraging firms to repatriate foreign earnings and invest that capital in the United States. However, the Act did not require a direct tracing of the spending of repatriated funds; accordingly, repatriating firms could ignore the investment prescriptions of the Act since Tax regulators were provided no legally viable basis to pursue violations of the spending requirements. We use this event to provide evidence on the effect of political scrutiny on firms’ Tax Law compliance in a setting where regulatory enforcement plays essentially no role. Our findings suggest that repatriating firms facing greater levels of policymaker scrutiny, relative to other repatriating firms, exhibited greater compliance with the Act by increasing relative expenditures on permitted uses (R&D investment) and restraining expenditures on non-permitted uses. We also find that the spending patterns are different only for the group of high-scrutiny firms (i.e., there is a threshold effect). Our estimates imply that the repatriation Tax holiday induced, among such high-scrutiny firms alone, $0.41 of additional R&D spending per revenue dollar forgone by the Treasury under the Act. The evidence is generally consistent with the political cost hypothesis.
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political scrutiny and Tax Law compliance evidence from the american jobs creation act of 2004
Journal of The American Taxation Association, 2014Co-Authors: Jian Cao, Yunhao Chen, Roy Clemons, Michael R KinneyAbstract:ABSTRACT: The American Jobs Creation Act of 2004 (the Act [U.S. House of Representatives 2004]) created a Tax holiday encouraging firms to repatriate foreign earnings and invest that capital in the United States. However, the Act did not require a direct tracing of the spending of repatriated funds; accordingly, repatriating firms could ignore the investment prescriptions of the Act, since Tax regulators were provided no legally viable basis to pursue violations of the spending requirements. We use this event to provide evidence on the effect of political scrutiny on firms' Tax Law compliance in a setting where regulatory enforcement plays essentially no role. Our findings suggest that repatriating firms facing greater levels of policymaker scrutiny, relative to other repatriating firms, exhibited greater compliance with the Act by increasing relative expenditures on permitted uses (R&D investment) and restraining expenditures on nonpermitted uses. We also find that the spending patterns are different onl...
Reuven S Aviyonah - One of the best experts on this subject based on the ideXlab platform.
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the worst Tax Law ever enacted
Social Science Research Network, 2020Co-Authors: Reuven S AviyonahAbstract:Some Tax Laws are worse than others. The 1986 Tax reform act is generally considered one of the best. The 2017 Tax Cuts and Jobs Act is generally considered one of the worst, although I would say it is too early to tell what its long-term impact might be, and some of its worst features (like the section 199A deduction) might be repealed in the near future if the Democrats win in November. Another example of a generally condemned Tax Law is the American Jobs Creation Act of 2004. This Law was a must-pass piece of legislation because Congress needed to react to the sanctions imposed upon the US by the EU as the result of its victory in the ETI litigation at the WTO. The AJCA included such beauties as a temporary participation exemption that did not create any jobs, a significant increase in the potential for cross-crediting in the foreign Tax credit, and a deeply fLawed anti-inversion rule that immediately gave rise to a second wave of inversions. But these bad features were not particularly lasting. The participation exemption only lasted one year, the cross-crediting provisions were significantly revised in 2017, and the anti-inversion provision became less relevant after 2017. Any damage that was done was temporary. To get to a bad Tax Law whose effects were really long-lasting, one should go much farther back to the Revenue Act of 1918.
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should us Tax Law be constitutionalized centennial reflections on eisner v macomber 1920
Social Science Research Network, 2020Co-Authors: Reuven S AviyonahAbstract:The US Supreme Court last decided a federal Tax case on constitutional grounds in 1920, a century ago. The case was Eisner v. Macomber, and the issue was whether Congress had the power under the Sixteenth Amendment (authorizing an income Tax, 1913) to include stock dividends in the Tax base. The Court answered no because “income” in the Sixteenth Amendment meant “the gain derived from capital, from labor, or from both combined.” A stock dividend, since it did not increase the wealth of the shareholder, was not “income.” Macomber was never formally overruled, and it is sometime still cited by academics and practitioners for the proposition that the Constitution requires that income be “realized” to be subject to Tax. However, in Glenshaw Glass, the Court held in the context of treble antitrust damages that the Macomber definition of income for constitutional purposes “was not meant to provide a touchstone to all future gross income questions” and that a better definition encompassed all “instances of undeniable accessions to wealth, clearly realized, and over which the Taxpayers have complete dominion.” In the century that has passed since Macomber, the Court has never held that a federal Tax statute was unconstitutional. This behavior of the Court constitutes a remarkable example of American Tax exceptionalism, because in most other countries Tax Laws are subject to constitutional review and are frequently ruled unconstitutional. In what follows, we will first examine three examples of how Tax Law is constitutionalized in other countries (part 2). We will then look at some of the larger Tax expenditures in the US and ask how they would fare under constitutional scrutiny (part 3). Finally, we will attempt to answer the question whether US Tax Law should be constitutionalized, and answer in a reluctant negative (part 4). But we will also urge Congress, which is equally charged with upholding constitutional values, to take horizontal equity more into consideration when evaluating Tax expenditures.
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altera the arm s length standard and customary international Tax Law
MJIL Opinio Juris, 2017Co-Authors: Reuven S AviyonahAbstract:The recent Altera case in the US Tax Court (on appeal to the Ninth Circuit) raises interesting issues in regard to the much-debated topic of whether customary international Tax Law (CITL) exists. Altera involved the question whether the cost of employee stock options should be included in the pool of cost that must be shared under a cost sharing agreement. In Xilinx, the Ninth Circuit held under a previous version of the regulations that these costs should not be included because unrelated parties operating at arm’s length would not have agreed to include them. Treasury then amended the regulation to state specifically that “all” costs includes the cost of stock options, but did not carve out an exception from the arm’s length standard. In Altera, the Tax Court sitting en banc invalidated the new regulation on the ground that it was inconsistent with the arm’s length standard (ALS). This paper discusses the implications of Altera for the long-running debate about whether CITL exists and whether it is binding on the United States.
Yunhao Chen - One of the best experts on this subject based on the ideXlab platform.
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political scrutiny and Tax Law compliance evidence from the american jobs creation act of 2004
Social Science Research Network, 2014Co-Authors: Jian Cao, Yunhao Chen, Roy Clemons, Michael R KinneyAbstract:The American Jobs Creation Act of 2004 (the Act) created a Tax holiday encouraging firms to repatriate foreign earnings and invest that capital in the United States. However, the Act did not require a direct tracing of the spending of repatriated funds; accordingly, repatriating firms could ignore the investment prescriptions of the Act since Tax regulators were provided no legally viable basis to pursue violations of the spending requirements. We use this event to provide evidence on the effect of political scrutiny on firms’ Tax Law compliance in a setting where regulatory enforcement plays essentially no role. Our findings suggest that repatriating firms facing greater levels of policymaker scrutiny, relative to other repatriating firms, exhibited greater compliance with the Act by increasing relative expenditures on permitted uses (R&D investment) and restraining expenditures on non-permitted uses. We also find that the spending patterns are different only for the group of high-scrutiny firms (i.e., there is a threshold effect). Our estimates imply that the repatriation Tax holiday induced, among such high-scrutiny firms alone, $0.41 of additional R&D spending per revenue dollar forgone by the Treasury under the Act. The evidence is generally consistent with the political cost hypothesis.
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political scrutiny and Tax Law compliance evidence from the american jobs creation act of 2004
Journal of The American Taxation Association, 2014Co-Authors: Jian Cao, Yunhao Chen, Roy Clemons, Michael R KinneyAbstract:ABSTRACT: The American Jobs Creation Act of 2004 (the Act [U.S. House of Representatives 2004]) created a Tax holiday encouraging firms to repatriate foreign earnings and invest that capital in the United States. However, the Act did not require a direct tracing of the spending of repatriated funds; accordingly, repatriating firms could ignore the investment prescriptions of the Act, since Tax regulators were provided no legally viable basis to pursue violations of the spending requirements. We use this event to provide evidence on the effect of political scrutiny on firms' Tax Law compliance in a setting where regulatory enforcement plays essentially no role. Our findings suggest that repatriating firms facing greater levels of policymaker scrutiny, relative to other repatriating firms, exhibited greater compliance with the Act by increasing relative expenditures on permitted uses (R&D investment) and restraining expenditures on nonpermitted uses. We also find that the spending patterns are different onl...
Roy Clemons - One of the best experts on this subject based on the ideXlab platform.
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political scrutiny and Tax Law compliance evidence from the american jobs creation act of 2004
Social Science Research Network, 2014Co-Authors: Jian Cao, Yunhao Chen, Roy Clemons, Michael R KinneyAbstract:The American Jobs Creation Act of 2004 (the Act) created a Tax holiday encouraging firms to repatriate foreign earnings and invest that capital in the United States. However, the Act did not require a direct tracing of the spending of repatriated funds; accordingly, repatriating firms could ignore the investment prescriptions of the Act since Tax regulators were provided no legally viable basis to pursue violations of the spending requirements. We use this event to provide evidence on the effect of political scrutiny on firms’ Tax Law compliance in a setting where regulatory enforcement plays essentially no role. Our findings suggest that repatriating firms facing greater levels of policymaker scrutiny, relative to other repatriating firms, exhibited greater compliance with the Act by increasing relative expenditures on permitted uses (R&D investment) and restraining expenditures on non-permitted uses. We also find that the spending patterns are different only for the group of high-scrutiny firms (i.e., there is a threshold effect). Our estimates imply that the repatriation Tax holiday induced, among such high-scrutiny firms alone, $0.41 of additional R&D spending per revenue dollar forgone by the Treasury under the Act. The evidence is generally consistent with the political cost hypothesis.
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political scrutiny and Tax Law compliance evidence from the american jobs creation act of 2004
Journal of The American Taxation Association, 2014Co-Authors: Jian Cao, Yunhao Chen, Roy Clemons, Michael R KinneyAbstract:ABSTRACT: The American Jobs Creation Act of 2004 (the Act [U.S. House of Representatives 2004]) created a Tax holiday encouraging firms to repatriate foreign earnings and invest that capital in the United States. However, the Act did not require a direct tracing of the spending of repatriated funds; accordingly, repatriating firms could ignore the investment prescriptions of the Act, since Tax regulators were provided no legally viable basis to pursue violations of the spending requirements. We use this event to provide evidence on the effect of political scrutiny on firms' Tax Law compliance in a setting where regulatory enforcement plays essentially no role. Our findings suggest that repatriating firms facing greater levels of policymaker scrutiny, relative to other repatriating firms, exhibited greater compliance with the Act by increasing relative expenditures on permitted uses (R&D investment) and restraining expenditures on nonpermitted uses. We also find that the spending patterns are different onl...
