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Us Corporate Income Tax Reform And Its Spillovers
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Book Synopsis U.S. Corporate Income Tax Reform and its Spillovers by : Kimberly Clausing
Download or read book U.S. Corporate Income Tax Reform and its Spillovers written by Kimberly Clausing and published by International Monetary Fund. This book was released on 2016-09-07 with total page 47 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines the main distortions of the U.S. corporate income tax (CIT), focusing on its international aspects, and proposes a set of reforms to alleviate them. A bold reform to replace the CIT with a corporate-level rent tax could induce efficiency-enhancing reform of the international tax system. Since fundamental reform is politically difficult, this paper also proposes an incremental reform that would reduce tax expenditures, reduce the CIT rate to 25-28 percent, and impose a minimum rent tax on foreign earnings. Finally, this paper analyzes empirically the likely impact of the incremental on corporate revenues outside the U.S.: Though a U.S. rate cut would likely lower revenues elsewhere, implementation of a strong minimum tax could more than offset that effect for most countries with effective tax rates above 15 percent.
Book Synopsis Tax Spillovers from US Corporate Income Tax Reform by : Sebastian Beer
Download or read book Tax Spillovers from US Corporate Income Tax Reform written by Sebastian Beer and published by International Monetary Fund. This book was released on 2018-07-13 with total page 36 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper describes, and where possible tentatively quantifies, likely tax spillovers from the U.S. corporate income tax reform that was part of the broader 2017 tax reform. It calculates effective tax rates under various assumptions, showing among other findings, how the interest limitation and the Foreign Derived Intangible Income provision can raise or reduce rates. It tentatively estimates that under constant policies elsewhere, the rate cut will reduce tax revenue from multinationals in other countries by on average 1.6 to 5.2 percent. If other countries react in line with historical reaction functions, the revenue loss from multinationals rises to an average of 4.5 to 13.5 percent. The paper also discusses profit-shifting, real location, and policy reactions from the more complex features of the reform.
Book Synopsis Corporate Tax Reform: From Income to Cash Flow Taxes by : Benjamin Carton
Download or read book Corporate Tax Reform: From Income to Cash Flow Taxes written by Benjamin Carton and published by International Monetary Fund. This book was released on 2019-01-16 with total page 34 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper uses a multi-region, forward-looking, DSGE model to estimate the macroeconomic impact of a tax reform that replaces a corporate income tax (CIT) with a destination-based cash-flow tax (DBCFT). Two key channels are at play. The first channel is the shift from an income tax to a cash-flow tax. This channel induces the corporate sector to invest more, boosting long-run potential output, GDP and consumption, but crowding out consumption in the short run as households save to build up the capital stock. The second channel is the shift from a taxable base that comprises domestic and foreign revenues, to one where only domestic revenues enter. This leads to an appreciation of the currency to offset the competitiveness boost afforded by the tax and maintain domestic investment-saving equilibrium. The paper demonstrates that spillover effects from the tax reform are positive in the long run as other countries’ exports benefit from additional investment in the country undertaking the reform and other countries’ domestic demand benefits from improved terms of trade. The paper also shows that there are substantial benefits when all countries undertake the reform. Finally, the paper demonstrates that in the presence of financial frictions, corporate debt declines under the tax reform as firms are no longer able to deduct interest expenses from their profits. In this case, the tax shifting results in an increase in the corporate risk premia, a near-term decline in output, and a smaller long-run increase in GDP.
Download or read book US Corporate Tax Rate Cuts written by and published by . This book was released on 2019 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: We examine spillovers to the Irish economy from US corporate income tax rate cuts and find they lead to a small but persistent increase in Irish economic output. Our analysis of the transmission channels shows that an increase in investment, employment and exports in the externally-financed industrial sector largely drives this expansion. We also find that output spillovers from US corporate income tax cuts are larger when there is slack in the Irish labour market. Our findings suggest that the changing structure of the Irish economy means any spillovers to real economic activity from the recent US corporate tax cuts could be relatively minor. However, the larger presence and shifting focus of foreign multinational corporations’ operations in Ireland means lessons from past US corporate tax cuts may be of limited value in predicting the effects of the recent US tax system reform.
Book Synopsis Fiscal Spillovers by : Madeline Hanson
Download or read book Fiscal Spillovers written by Madeline Hanson and published by . This book was released on 2021 with total page 58 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis The International Spillover Effects of U.S. Tax Reform by : Kiwon Kang
Download or read book The International Spillover Effects of U.S. Tax Reform written by Kiwon Kang and published by . This book was released on 2002 with total page 316 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis The Corporate Income Tax System by : Mark P. Keightley
Download or read book The Corporate Income Tax System written by Mark P. Keightley and published by Createspace Independent Publishing Platform. This book was released on 2012-10-22 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Many economists and policymakers believe that the U.S. corporate tax system is in need of reform. There is, however, disagreement over why the corporate tax system needs to be reformed, and what specific policy measures should be included in a reform. To assist policymakers in designing and evaluating corporate tax proposals, this report (1) briefly reviews the current U.S. corporate tax system; (2) discusses economic factors that may be considered in the corporate tax reform debate; and (3) presents corporate tax reform policy options, including a brief discussion of current corporate tax reform proposals. The current U.S. corporate income tax system generally taxes corporate income at a rate of 35%. This tax is applied to income earned domestically and abroad, although taxes on certain income earned abroad can be deferred indefinitely if that income remains overseas. The U.S. corporate tax system also contains a number of deductions, exemptions, deferrals, and tax credits, often referred to as "tax expenditures." Collectively, these provisions reduce the effective tax rate paid by many U.S. corporations below the 35% statutory rate. In 2011, the sum of all corporate tax expenditures was $158.8 billion. The significance of the corporate tax as a federal revenue source has declined over time. At its post-WWII peak in 1952, the corporate tax generated 32.1% of all federal tax revenue. In 2010, the corporate tax accounted for 8.9% of federal tax revenue. The decline in corporate revenues is a combination of decreasing effective tax rates, an increasing fraction of business activity that is being carried out by pass-through entities (particularly partnerships and S corporations, which are not subject to the corporate tax), and a decline in corporate sector profitability. A particular aspect of the corporate tax system that receives substantial attention is the 35% statutory corporate tax rate. Although the U.S. has the world's highest statutory corporate tax rate, the U.S. effective corporate tax rate is similar to the Organization for Economic Co-operation and Development (OECD) average. Further, the U.S. collects less in corporate tax revenue relative to Gross Domestic Production (GDP) (1.9% in 2009) than the average of other OECD countries (2.8% in 2009). This report discusses a number of economic considerations that may be made while evaluating various corporate tax reform proposals. These might include analyses of the likely effect on households of certain reforms (also known as incidence analysis). Policymakers might also want to consider how certain corporate tax provisions contribute to the allocation of economic resources, choosing policies that promote an efficient use of resources. Other goals of corporate tax reform may include designing a system that is simple to comply with and administer, while also promoting competitiveness of U.S. corporations. Commonly discussed corporate tax reforms include policies that would broaden the tax base (i.e., eliminate tax expenditures) to finance reduced corporate tax rates. Concerns that the U.S. corporate tax system inefficiently imposes a "double tax" on corporate income has led some to consider an integration of the corporate and individual tax systems. The treatment of pass-through income-business income not earned by C corporations-has also received considerable attention in tax reform debates. How the U.S. taxes income earned abroad, and the possibility of moving to a territorial tax system, have emerged as important issues. Both the Obama Administration and the House Committee on Ways and Means Chairman David Camp have released tax reform proposals that would change the current tax treatment of U.S. multinationals.
Book Synopsis The Tax Cuts and Jobs Act: An Appraisal by : Mr.Nigel A Chalk
Download or read book The Tax Cuts and Jobs Act: An Appraisal written by Mr.Nigel A Chalk and published by International Monetary Fund. This book was released on 2018-08-07 with total page 48 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper assesses the landmark Tax Cuts and Jobs Act (TCJA), from the perspective of both the U.S. itself and the wider world. The reform has many positive aspects including steps to broaden the base of, and reduce marginal rates under, the personal income tax (PIT), reduce distortions to investment and financing decisions, and mitigate outward profit shifting. But the TCJA has a large fiscal price tag and leaves significant uncertainty as to how the U.S. tax system will develop. The PIT changes could have better targeted relief at low earners, and there is scope to more fully address distortions in business taxation. The novel international provisions create a complex array of both positive and negative international spillovers, and have the potential to significantly reshape the wider international tax system.
Book Synopsis U.S. Corporate Income Tax Reform and its Spillovers by : Kimberly Clausing
Download or read book U.S. Corporate Income Tax Reform and its Spillovers written by Kimberly Clausing and published by International Monetary Fund. This book was released on 2016-07-05 with total page 47 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines the main distortions of the U.S. corporate income tax (CIT), focusing on its international aspects, and proposes a set of reforms to alleviate them. A bold reform to replace the CIT with a corporate-level rent tax could induce efficiency-enhancing reform of the international tax system. Since fundamental reform is politically difficult, this paper also proposes an incremental reform that would reduce tax expenditures, reduce the CIT rate to 25-28 percent, and impose a minimum rent tax on foreign earnings. Finally, this paper analyzes empirically the likely impact of the incremental on corporate revenues outside the U.S.: Though a U.S. rate cut would likely lower revenues elsewhere, implementation of a strong minimum tax could more than offset that effect for most countries with effective tax rates above 15 percent.
Download or read book Fiscal Spillovers written by and published by . This book was released on 2021 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: 'This paper extends the identification of unanticipated changes in average federal corporate and personal income tax rates in the United States, as proposed in Mertens and Ravn (2013), to the end of 2019, and assesses their propagation to economies with tight links to the US economy. While cuts in both taxes lead to significant short-run expansions in the US economy, their spillover effects on other countries differ markedly. A cut in corporate taxes can produce negative spillovers, indicating that the contractionary effects associated to the reallocation of investment and jobs by multinational firms outweigh the potential positive effects of increased demand for country-specific goods through trade with the US. The spillover effects of lower personal income taxes are more heterogeneous across countries but are, on average, expansionary, depending on the country-specific monetary policy stance'--Abstract, page ii.
Author :Congressional Research Congressional Research Service Publisher :CreateSpace ISBN 13 :9781505450071 Total Pages :38 pages Book Rating :4.4/5 (5 download)
Book Synopsis The Corporate Income Tax System by : Congressional Research Congressional Research Service
Download or read book The Corporate Income Tax System written by Congressional Research Congressional Research Service and published by CreateSpace. This book was released on 2014-12-01 with total page 38 pages. Available in PDF, EPUB and Kindle. Book excerpt: Many economists and policy makers believe that the U.S. corporate tax system is in need of reform. There is, however, disagreement over why the corporate tax system needs to be reformed, and what specific policy measures should be included in a reform. To assist policy makers in designing and evaluating corporate tax proposals, this report (1) briefly reviews the current U.S. corporate tax system; (2) discusses economic factors that may be considered in the corporate tax reform debate; and (3) presents corporate tax reform policy options, including a brief discussion of current corporate tax reform proposals. The current U.S. corporate income tax system generally taxes corporate income at a rate of 35%. This tax is applied to income earned domestically and abroad, although taxes on certain income earned abroad can be deferred indefinitely if that income remains overseas. The U.S. corporate tax system also contains a number of deductions, exemptions, deferrals, and tax credits, often referred to as "tax expenditures." Collectively, these provisions reduce the effective tax rate paid by many U.S. corporations below the 35% statutory rate. In 2014, the sum of all corporate tax expenditures was $154.4 billion. The significance of the corporate tax as a federal revenue source has declined over time. At its post-WWII peak in 1952, the corporate tax generated 32.1% of all federal tax revenue. In 2013, the corporate tax accounted for 9.9% of federal tax revenue. The decline in corporate revenues is a combination of decreasing effective tax rates, an increasing fraction of business activity that is being carried out by pass-through entities (particularly partnerships and S corporations, which are not subject to the corporate tax), and a decline in corporate sector profitability. A particular aspect of the corporate tax system that receives substantial attention is the 35% statutory corporate tax rate. Although the United States has the world's highest statutory corporate tax rate, the U.S. effective corporate tax rate is similar to the Organization for Economic Co-operation and Development (OECD) average. Further, the United States collects less in corporate tax revenue relative to Gross Domestic Production (GDP) (2.3% in 2011) than the average of other OECD countries (3.0% in 2011). This report discusses a number of economic considerations that may be made while evaluating various corporate tax reform proposals. These might include analyses of the likely effect on households of certain reforms (also known as incidence analysis). Policy makers might also want to consider how certain corporate tax provisions contribute to the allocation of economic resources, choosing policies that promote an efficient use of resources. Other goals of corporate tax reform may include designing a system that is simple to comply with and administer, while also promoting competitiveness of U.S. corporations. Commonly discussed corporate tax reforms include policies that would broaden the tax base (i.e., eliminate tax expenditures) to finance reduced corporate tax rates. Concerns that the U.S. corporate tax system inefficiently imposes a "double tax" on corporate income have led some to consider an integration of the corporate and individual tax systems. The treatment of pass-through income-business income not earned by C corporations-has also received considerable attention in tax reform debates. How the United States taxes income earned abroad, and the possibility of moving to a territorial tax system, have emerged as important issues.
Book Synopsis Reforming the US Corporate Tax by : Gary Clyde Hufbauer
Download or read book Reforming the US Corporate Tax written by Gary Clyde Hufbauer and published by Peterson Institute. This book was released on 2005 with total page 128 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Corporate Income Tax System by : Paul Giachetto
Download or read book Corporate Income Tax System written by Paul Giachetto and published by Nova Science Publishers. This book was released on 2013 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Many economists and policy-makers believe that the U.S. corporate tax system is in need of reform. There is, however, disagreement over why the corporate tax system needs to be reformed, and what specific policy measures should be included in a reform. To assist policy-makers in designing and evaluating corporate tax proposals, this book reviews the current U.S. corporate tax system; discusses economic factors that may be considered in the corporate tax reform debate; and presents corporate tax reform policy options, including a brief discussion of current corporate tax reform proposals. The current U.S. corporate income tax system generally taxes corporate income at a rate of 35%. This tax is applied to income earned domestically and abroad, although taxes on certain income earned abroad can be deferred indefinitely if that income remains overseas. The U.S. corporate tax system also contains a number of deductions, exemptions, deferrals, and tax credits, often referred to as tax expenditures. Collectively, these provisions reduce the effective tax rate paid by many U.S. corporations below the 35% statutory rate. In 2011, the sum of all corporate tax expenditures was $158.8 billion.
Book Synopsis Macroeconomic and Distributional Effects of Personal Income Tax Reforms by : Mrs.Sandra V Lizarazo Ruiz
Download or read book Macroeconomic and Distributional Effects of Personal Income Tax Reforms written by Mrs.Sandra V Lizarazo Ruiz and published by International Monetary Fund. This book was released on 2017-09-01 with total page 32 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper assesses the macroeconomic and distributional impact of personal income tax (PIT) reforms in the U.S. drawing on a multi-sector heterogenous agents model in which consumers have non-homothetic preferences and sectors differ in terms of their relative labor and skill intensity. The model is calibrated to key characteristics of the US economy. We find that (i) PIT cuts stimulate growth but the supply side effects are never large enough to offset the revenue loss from lower marginal tax rates; (ii) PIT cuts do “trickle-down” the income distribution: tax cuts stimulate demand for non-tradable services which raise the wages and employment prospects of low-skilled workers even if the tax cut is not directly incident on them; (iii) A revenue neutral tax plan that reduces PIT for middle-income groups, raises the consumption tax, and expands the Earned Income Tax Credit can have modestly positive effects on growth while reducing income polarization; (iv) The growth effects from lower income taxes are concentrated in non-tradable service sectors although the increased demand for tradable goods generate positive spillovers to other countries; (v) Tax cuts targeted to higher income groups have a stronger growth impact than tax cuts for middle income households but significantly worsen income polarization, even after taking into account trickle-down effects and an expansion of the Earned Income Tax Credit.
Book Synopsis Corporate Tax Reform by : Christopher H. Hanna
Download or read book Corporate Tax Reform written by Christopher H. Hanna and published by . This book was released on 2016 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: In the last few years, academics, practitioners and government officials have engaged in serious discussions in reforming the U.S. corporate income tax system. Some, if not much of the discussion, has focused on maintaining the competitiveness of U.S. corporations in a global economy. As a result, some have argued that the U.S. needs to reduce its top corporate tax rate from 35 percent, which is currently among the highest of the 30 OECD countries, to a rate around 30 percent or even lower. Others have maintained that the U.S. needs to enact specific or targeted tax incentives, such as expensing of all equipment purchases. In discussing reform of the U.S. corporate income tax system, one aspect of reform seems to be consistently overlooked, ignored or marginalized: the impact reform will have on the financial statements of the Fortune 500 companies and other publicly held corporations, which I focus on and refer to as “Corporate America.” In Corporate America, the overwhelming emphasis is on a corporation's net income, earnings per share (EPS) and effective tax rate. The different types of corporate tax reform may have a significantly differently impact on a corporation's net income, EPS and effective tax rate. Consequently, because of Corporate America's focus on net income, EPS and the effective tax rate, the effectiveness of the various types of corporate tax reform may be greatly impacted by the form. For example, if economists agree that a directed tax preference is needed to stimulate economic expansion, the form of the tax preference and its impact on Corporate America's financial statements may significantly affect the effectiveness of the tax preference. As a result, in determining the form of corporate tax reform, whether major or minor reform, it is critical to look at the impact on Corporate America's financial statements.
Book Synopsis The US Corporate Income Tax Reform and Its Implications for the EU by : Petr Janský
Download or read book The US Corporate Income Tax Reform and Its Implications for the EU written by Petr Janský and published by . This book was released on 2019 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: The recent US tax reform, Tax Cuts and Jobs Act of 2017, lowered the statutory corporate income tax rates and brought other important changes for the taxation of multinational enterprises worldwide. This paper reviews these changes and discusses their effects for effective tax rates and tax revenues within the US as well as the EU. In the light of the uncertain impacts of the US reform, the EU doing nothing specific seems a reasonable response in the short term. Still, the EU should consider implementing policy proposals, which are good in themselves and regardless of the ultimate effects of the US reform. These include the Common Consolidated Corporate Tax Base and other measures focused at lowering the adverse effects of profit shifting to other countries as well as within the EU.
Book Synopsis Corporate Tax Reform by : Jane Gravelle
Download or read book Corporate Tax Reform written by Jane Gravelle and published by Createspace Independent Publishing Platform. This book was released on 2017-10-10 with total page 66 pages. Available in PDF, EPUB and Kindle. Book excerpt: Interest in corporate tax reform that lowers the rate and broadens the base has developed in the past several years. Some discussions by economists in opinion pieces have suggested there is an urgent need to lower the corporate tax rate, but not necessarily to broaden the tax base, an approach that presents some difficulties given current budget pressures. Others see the corporate tax as a potential source of revenue. Arguments for lowering the corporate tax rate include the traditional concerns about economic distortions arising from the corporate tax and newer concerns arising from the increasingly global nature of the economy. Some claims have been made that lowering the corporate tax rate would raise revenue because of the behavioral responses, an effect that is linked to an open economy. Although the corporate tax has generally been viewed as contributing to a more progressive tax system because the burden falls on capital income and thus on higher-income individuals, claims have also been made that the burden falls not on owners of capital, but on labor income. The analysis in this report suggests that many of the concerns expressed about the corporate tax are not supported by empirical evidence. Claims that behavioral responses could cause revenues to rise if rates were cut do not hold up on either a theoretical or an empirical basis. Studies that purport to show a revenue-maximizing corporate tax rate of 30% (a rate lower than the current statutory tax rate) contain econometric errors that lead to biased and inconsistent results; when those problems are corrected the results disappear. Cross-country studies to provide direct evidence showing that the burden of the corporate tax actually falls on labor yield unreasonable results and prove to suffer from econometric flaws that also lead to a disappearance of the results when corrected, in those cases where data were obtained and the results replicated. Many studies that have been cited are not relevant to the United States because they reflect wage bargaining approaches and unions have virtually disappeared from the private sector in the United States. Overall, the evidence suggests that the tax is largely borne by capital. Similarly, claims that high U.S. tax rates will create problems for the United States in a global economy suffer from a misrepresentation of the U.S. tax rate compared with other countries and are less important when capital is imperfectly mobile, as it appears to be. Although these new arguments appear to rely on questionable methods, the traditional concerns about the corporate tax appear valid. While an argument may be made that the tax is still needed as a backstop to individual tax collections, it does result in some economic distortions. These economic distortions, however, have declined substantially over time as corporate rates and shares of output have fallen. Moreover, it is difficult to lower the corporate tax without creating a way of sheltering individual income given the low tax rates on dividends and capital gains. A number of revenue-neutral changes are available that could reduce these distortions, allow for a lower corporate statutory tax rate, and lead to a more efficient corporate tax system. These changes include base broadening, reducing the benefits of debt finance through inflation indexing, taxing large pass-through firms as corporations, and reducing the tax at the firm level offset by an increase at the individual level. Nevertheless, the scope for reducing the tax rate in a revenue-neutral way may be limited.
