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Approximately 41 million family caregivers in the United States provide an estimated 34 billion hours of unpaid care to an adult with limitations in daily activities. AARP continues to support family caregivers and those for whom they care in a number of ways. This chapter describes the findings of the seminal Home Alone report. This research revealed that family caregivers are called on to perform complex medical/nursing tasks in addition to assisting with ADLs and IADLs and providing care management. Family caregivers perform these complex medical/nursing talks with limited instruction or support from health care providers. In response to the report, AARP developed model state legislation—the CARE (Caregiver Advise, Record, Enable) Act. AARP also created the Home Alone Alliance to help bridge the gap between what family caregivers are expected to do and the limited instruction they receive. The Home Alone Alliance has developed how-to videos and resources that are available on the AARP website. Because most family caregivers work outside the home in addition to caring for ill family members, AARP is encouraging employers to offer workplace flexibility options, such as paid family leave and allowing workers to use sick leave to care for ill family members. This chapter details state efforts in these areas as well as state programs to relieve the financial strain of caregiving through a tax credit for family caregivers as well as other mechanisms. On the federal side, AARP is supporting implementation of the 2018 RAISE (Recognize, Assist, Include, Support and Engage) Family Caregivers Act. As strategy is developed, AARP will continue to encourage coordination among federal, state, and local partners and stakeholders.

How much stimuli that should be attributed to R&D investments crucially depends on how the benefits of R&D reverberate throughout the economy. An extensive literature has found major spillover effects from R&D investments from one industry to another. Using a macroeconomic model for a small open economy, we analyze how tax credits stimulate R&D through the user cost of capital and how it impacts the economy in general via knowledge flows from R&D capital. We find that a tax credit scheme that lowers the user cost of R&D capital, leads to a gradual increase in aggregate productivity. In the long run, the levels of output, real wages, and consumption are around one percent higher than the baseline.

Renewable energy, especially for electricity generation, has been growing at a fast pace with global renewable power capacity addition reaching two-thirds of total generation capacity added in 2018. Renewable power has become competitive with fossil fuel in many countries but renewables still face a variety of barriers to achieve their full potential. The barriers vary across countries/regions and include economic, technical, awareness and information, financial, regulatory and policy, institutional and administrative, social and environmental, and end-use/demand-side barriers, the last one a relatively new one. Integration of variable power in the grid is another new technical barrier that countries with high penetration of renewable power are facing. This paper shows that there is good experience on the identification of barriers and measures to address them. These measures include political commitment through renewable energy targets, and renewable promotion measures including support mechanisms such as feed-in tariff, auction, renewable energy certificates, renewable portfolio standards and net metering. Fiscal incentives including tax credit and incentive schemes and public financing of renewable energy are other measures taken by countries to address the barriers. For success, stakeholder consultation is an important component of barriers identification as well in deciding on measures to address the barriers.

The United States has a long history of creating business incentives for public policy goals through the use of federal corporate tax incentives. Rather than create direct subsidies, US legislators have often chosen to subsidize certain activities by creating tax credits for companies that make qualifying investments. However, renewable energy project sponsors often have limited or no tax liabilities to absorb the tax credits. Therefore, a market has developed for tax equity investments whereby investors with appreciable tax capacity to absorb the tax can invest into special purpose companies that own renewable energy projects. This chapter discusses the various tax incentives available for renewable energy projects and the tax equity financing structures that are commonly used to monetize the tax benefits.

Based on a spatial extension of an R&D investment model, this paper measures the macroeconomic impact of the French R&D policy mix on business R&D using regional data. Our measure takes into account not only the direct effect of policies but also indirect effects generated by the existence of spatial interaction between regions. Using a unique database containing information on the levels of various R&D policy instruments received by firms in French NUTS3 regions over the period 2001–2011, our estimates of a spatial Durbin model with structural breaks and fixed effects reveal the existence of a negative spatial dependence among R&D investments in regions. In this context, while a-spatial estimates would conclude that all instruments have a crowding-in effect, we show that national subsidies are the only instrument that is able to generate significant crowding-in effects. On the contrary, it seems that the design, size and spatial allocation of funds from the other instruments (tax credits, local subsidies, European subsidies) lead them to act (in the French context) as beggar-thy-neighbor policies. Fil: Montmartin, Benjamin. Université Côte d’Azur; Francia Fil: Herrera Gomez, Marcos Hernan. Consejo Nacional de Investigaciones Científicas y Técnicas; Argentina. Universidad Nacional de Salta. Facultad de Ciencias Económicas, Jurídicas y Sociales. Instituto de Estudios Laborales y del Desarrollo Económico; Argentina Fil: Massard, Nadine. Université Grenoble Alpes; Francia

Global warming issue due to the combustion of fossil fuel pushes the world to produce renewable and environmental friendly fuel from sustainable feedstock. There are several measures on different levels to reduce the global warming including clean energies from wind, solar, and biomass. There are different aspects in bringing these technologies into a reality including development of technology, economic feasibilities, environmental sustainability and finally, support from the government in the form of effective policies and public awareness. Adequate R&D efforts could overcome all the factors but only an effective policy could drive those efforts to reality. Therefore, in this connection this review initially addresses the present state of energy demand, progression of biofuel sources and the bottlenecks in microalgal biofuel production and commercialization. The biofuel policies are essential to change the world's dependence on fossil fuels for a better tomorrow. Hence, this review addresses the salient features of National Biofuel Policy of India that helps in regulating the biofuels production and their marketing. As a part of Policy implementation, government of India introduced several schemes and programs in last two-decades, which includes mandate blending of ethanol with gasoline, diesel with biodiesel, for the future clean energy vision, and incentivizing bio-based products/fuels. In addition, participation of both federal and state governments for clean energy initiatives, capital investments and tax credits were described in detail. Many policies lack easy outreach among public and industries, which needs marketing by the government that secures a clean energy future in India. Though India is in the process of evolution, it might be quite difficult to enact a dedicative legislation to deal with the challenges of biofuel marketing. Therefore, recent initiatives and scope were summarized in this review for future endeavours.

The US solar photovoltaic (PV) industry has witnessed a rapid growth over the past decade. Declining costs enabled by the creation of significant markets, coupled with the extension of the 30% Investment Tax Credit (ITC) through 2021, has propelled the industry. Nonetheless, solar energy remains a minority contributor to US energy production at 1.4% of the 2016 energy mix. This chapter will examine the distinctive qualities of the US solar energy market, from general trends and federal policy to state developments, forecasts, and innovations.

This chapter focuses on the implications of tax and accounting considerations for the deal-structuring process. Tax considerations can affect the amount, timing, and composition of the purchase price. If a transaction is taxable, target shareholders typically demand a higher purchase price to offset the anticipated tax liability. The increase in the purchase price may cause the acquirer to defer some portion of the purchase price by altering the terms to include more debt or installment payments to maintain the same purchase price in present value terms. Moreover, the decision as to the appropriate organizational structure of the combined businesses is affected by such factors as the desire to minimize taxes and pass through losses to owners. The S corporation, LLC, and the partnership eliminate double-taxation problems. Current operating losses, loss carry forwards or carrybacks, or tax credits generated by the combined businesses can be passed through to the owners if the postclosing organization is a partnership or an LLC. With the elimination of pooling of interests as an alternative to purchase accounting in 2001 and further changes in financial reporting standards that took effect in late 2008, acquirers are likely to be more circumspect in making acquisitions. Overpayment for target firms and the use of contingent payout mechanisms can result in significant increases in future earnings volatility for acquiring firms. Furthermore, equity may become less attractive as a form of payment due to the requirement to record business combinations on the closing rather than the announcement date, although these concerns may be mitigated by the use of collar arrangements. The ever-present threat of these factors may exert some discipline into the negotiating process, affecting both the amount and timing of offer prices and the length and intensity of merger and acquition (M&A) due diligence.

We estimate the effect of the UK Stamp Duty Land Tax (SDLT) - a transfer tax on the purchase price of property or land - on different types of household mobility using micro data. Exploiting a discontinuity in the tax schedule, we isolate the impact of the tax from other determinants of mobility. We compare homeowners with self-assessed house values on either sides of a cut-off value where the tax rate jumps from 1 to 3 percent. We find that a higher SDLT has a strong negative impact on housing-related and short distance moves but does not adversely affect job-induced or long distance mobility. Overall, our results suggest that transfer taxes may mainly distort housing rather than labor markets.

This paper presents results from two large-scale natural field experiments that tested the effect of social norm messages on tax compliance. Using administrative data from > 200,000 individuals in the United Kingdom, we show that including social norm messages in standard reminder letters increases payment rates for overdue tax. This result offers a rare example of social norm messages affecting tax compliance behavior in a real world setting. We find no evidence that loss framing is more effective than gain framing. Descriptive norms appear to be more effective than injunctive norms. Messages referring to public services or financial information also significantly increased payment rates. The field experiments accelerated the collection of tax revenue at little cost.

We analyse if the Brazilian Allowance for Corporate Equity (ACE-type system) reduces the debt tax bias. Specifically, we study if the continuous treatment effect of interest on equity negatively affects the level of financial leverage. We find that the tax policy implemented is similar to the deductible cash dividends and not to an ACE. The empirical implication is that the interest on equity treatment increases the debt tax bias, producing a rebound effect to what is expected for this policy on the risk-taking behaviour and corporate capital structure. This rebound effect is homogeneous in firms with different financial constraints status. There are evidences that shareholders influence the cash distribution policy, adjusting the later to their own tax preferences. Therefore, there may be an “ACE clientele effect” induced by heterogeneity in tax preferences among shareholders. info:eu-repo/semantics/acceptedVersion

We provide evidence for convergence in the levels of household and business credit across European countries. The process is particularly strong for the transition countries that have a low initial level of private credit and are catching up with Western Europe. However, the convergence is associated mostly with household credit, including housing loans and consumer credit, which may limit its benefits for economic growth.

This paper examines the impact of the Dutch R&D tax incentive scheme on the wages of R&D workers. We construct firm specific R&D tax credit rates that vary over time following variations in the Dutch R&D tax incentive program. Using instrumental variables we estimate a wage-sharing model with an unbalanced firm-level panel data covering the period 1997-2004. The elasticity of the R&D wage with respect to the fraction of the wage supported by the fiscal incentives scheme is estimated at 0.2 in the short run and 0.24 in the long run. (C) 2013 Elsevier B.V. All rights reserved.

This paper extends the results of Boadway and Bruce (Journal of Public Economics, 1984, 24, 231–239) and Fane (Journal of Public Economics, 1987, 33, 95–105) to describe a tax on business profits which is neutral with respect to investment and wind-up decisions, and default outcomes, under uncertainty and bankruptcy risk. The tax base allows deductions for depreciation and the cost of finance, but requires knowledge of neither true economic depreciation nor the firm's required rate of return. We show that the tax must treat taxable profits and losses symmetrically, and that the tax rate must be a known constant, even in the special case when the tax base coincides with the economic rent earned in each period.

This paper considers the relationship between two general neutral business tax structures, which we label the ‘firm tax’ and the ‘shareholder tax’. The well-known R-based and S-based cash flow taxes, analysed by Meade (1978), are special cases of these two taxes. We demonstrate the neutrality of both taxes in the presence of uncertainty, and characterise the tax rules required in the event of default and wind-up. Our analysis provides the first proof of the neutrality of the S-based cash flow tax and the Allowance for Corporate Equity (ACE) corporation tax under uncertainty. We also discuss implementation and tax avoidance issues.

Economic factors such as audit rates and fines have shown inconsistent effects on tax payments, suggesting that they are not sufficient to explain tax compliance. Moreover, the tax compliance rate is surprisingly higher than what the standard economic model would predict. In the last fifteen years, literature aimed at solving this so called “puzzle of compliance” has increased and pointed out several factors that could possibly explain tax compliance processes, e.g., knowledge of the tax laws, trust toward the political system, as well as personal or social norms. The studies presented here examined the impact of social value orientation on tax morale and intention to avoid/evade taxes. Social value orientation was examined both as a chronic personal orientation (Studies 1 and 2) and as a contextual factor made salient by experimental manipulations (Study 3). The results are supportive of a relationship between social value orientation and measures of tax compliance. Furthermore, results of Study 3 provided evidence for a causal effect of social value orientation on intended tax non-compliance. The effect of social value orientation on intended tax non-compliance was mediated by tax morale (Studies 2 and 3). Results are discussed with reference to their potential practical applications.

Neutral tax systems that do not affect investment decisions are often considered desirable from a tax policy perspective. This paper uses the real option paradigm to derive neutral tax systems for the first time under risk aversion and irreversibility.

This chapter explains the economic advantage of using photovoltaic systems to supplement electrical utility energy demands. Cost savings and payback periods are examined as long-term investments. Electricity rate costs per kilowatt and PV system output are discussed relative to annual household demand. PV system cost factors such as equipment and labor are discussed. Comparisons of utility-provided electricity costs with the cost savings generated by a PV array are tabularized and graphically illustrated.

Following the economic criteria information presented in Chapter 6 , this chapter discusses the cost savings of using solar domestic hot water (DHW) systems versus conventional systems to heat water and graphically illustrates examples of payback periods. Cost savings and payback periods are examined as long-term investments. A method to determine BTU output is illustrated with worksheet examples and tabularized sunshine percentages. The importance of cash flow is emphasized, and the chapter elaborates upon cost factors such as energy inflation rates, equipment, labor, maintenance, and system operation. Cost comparative analyses of electric utility versus solar DHW and examples of savings realized are graphically illustrated. Payback and break-even cost analysis examples with and without tax credit incentives using actual system quotations are graphically depicted. Future worth of savings using Single Payment Compound Amount Factor tables from Chapter 6 are discussed illustrating the long-term investment advantages of a solar DHW system over a bank or savings institution.

The United States is far behind its competitors in national-level solar policy, which is expected given that it has never had a comprehensive energy policy. While the federal consumer tax credit of 30% for solar systems is one of the strongest drivers of the industry, the incentive structure from the US government is more of a patchwork quilt than a comprehensively and cohesively developed plan. Unlike its rivals, it has no national feed-in-tariff legislation and no renewable portfolio standard. Many states are filling in the gaps, with consumer incentives, state targets, and other programs. The federal response is currently limited to tax credits and deductions, federal installations, and supporting R&D and innovation for early stage concept development.

This chapter reviews tax research related to whether corporate and personal taxes affect domestic and multinational capital structure, debt maturity, payout policy, compensation policy, risk management, earnings management, leasing, pensions, R&D partnerships, tax shelters, transfer pricing, repatriation of foreign profits, and organizational form. For each topic, theory related to how taxes can affect corporate decision making and firm value is reviewed, followed by a summary of the related empirical evidence and a discussion of unresolved issues. Tax research generally supports the hypothesis that high-tax rate firms make policy choices in response to tax incentives. Many issues remain unresolved, however, including understanding whether tax effects are of first-order importance, why firms do not pursue tax benefits more aggressively, and measuring the effect of investor-level taxes on corporate actions.

We examine the use of dynamic overlapping generations (OLG) computable general equilibrium (CGE) models to analyze the economic effects of tax reforms, using as a paradigm our Diamond–Zodrow (DZ) model. Such models are especially well-suited to analyzing both the short-run transitional and the long-run dynamic macroeconomic effects of tax reforms, including the time paths of reform-induced changes in labor supply, saving, and investment, as well as the redistributional effects of reforms across and within generations. We begin with a brief overview of the use of OLG-CGE models in the analysis of tax reform, focusing on the seminal contribution of Auerbach and Kotlikoff (1987). We then consider a variety of extensions of this work, including the multiple-good, multiple-individual model constructed by Fullerton and Rogers (1993), as well as the addition of open economy factors, human capital accumulation and uncertainty. Many of the applications of these models have focused on changes in capital income taxation or, more generally, the replacement of an income tax system that fully taxes capital income with a consumption-based tax system that exempts normal returns to capital, and we focus on such reforms. We describe in considerable detail the DZ model, which is characterized by 55 cohorts, 12 income groups within each cohort, four production sectors and explicit calculation of reform-induced changes in asset values. We conclude by describing numerous applications of the DZ model, ranging from incremental reforms of the income tax system including deficit-financed tax cuts to ‘fundamental tax reforms’ that involve replacing the income tax with a consumption-based tax system, to the implementation of a value-added tax imposed in addition to the income tax as a means of reducing current deficits and the national debt in the US.

This paper develops an intertemporal simulation model designed to analyse tax policies in a small open economy. Within a finite horizon, overlapping generations framework, we introduce imperfect competition in the labour market, consumption and construction of durables in the form of housing units, and a public pension system. We simulate the model to illustrate some macroeconomic, allocative and distributional effects of a policy experiment involving a 10% cut in the capital income tax rate.

We assume a majority rule mechanism and examine how society trades off exemption levels and tax rates in a simple endowmwnt economy using a flat tax. Contrary to the presumption in Foley (Yale Economic Essays, 1967, 7, 45–98), we find that preferences over these tax structures are not single peaked. However, we are able to prove existence and provide a simple characterization of the majority rule equilibrium.

In this paper we propose estimates of the marginal cost of public funds (MCF) in 38 African countries. We develop a simple general equilibrium model that can handle taxes on five major tax classes, and can be calibrated with little more than national accounts data. Our base case estimate of the average MCF from marginal increases in all five tax instruments is 1.2. Focusing on the lowest cost tax instruments in each country, commonly the VAT but not always, the average MCF is 1.1. A key feature of our model is explicit recognition of the informal economy. The larger the informal economy, the higher MCFs tend to be. Extending the tax base to include sections of the informal economy by removing some tax exemptions offers the potential for a low MCF source of public funds, and a lowering of MCFs on other tax instruments.

Norwegian business spending on R&D is low by OECD standards. To stimulate business R&D, in 2002 the Norwegian government introduced a tax-based incentive, SkatteFUNN. We analyze the effects of SkatteFUNN on the likelihood of innovating and patenting. Using a rich database for Norwegian firms, we find that projects receiving tax credits result in the development of new production processes and to some extent the development of new products for the firm. Firms that collaborate with other firms are more likely to be successful in their innovation activities. However, the scheme does not appear to contribute to innovations in the form of new products for the market or patenting.

The Low-Income Housing Tax Credit (LIHTC) programme is the primary subsidy mechanism used to support the development of rental housing for low-income households in the United States. The programme adds about 1300 projects and 91 000 units per year. These projects are privately owned. The owners of the projects receive tax credits each year for 10 years in exchange for a commitment to maintain the units at affordable rents for occupancy by low-income households for a period of at least 15 years. The programme is proving to be popular with developers, but it is vulnerable to fluctuations in credit markets.

This chapter offers a general overview of the benefits and costs (e.g., reduced energy bills and reduced potable water consumption) of green design. The two categories of cost considerations when discussing green buildings (Direct Capital Costs and Direct Operating Costs) are explained in simple terms. Among the many advantages of green buildings and the application of the International Green Construction Codes (IgCCs) is increased productivity, improved tenant/employee health, and increased recruitment and retention capabilities. Likewise, green buildings offer numerous other benefits, both direct such as increased property values and increased marketability and indirect benefits such as enhanced image and reducing potential risks. Life-Cycle Costing and Analysis is examined and the necessary steps needed to perform an accurate analysis are discussed. Builders and manufacturers incentives, as well as federal, business, and consumer tax incentives are highlighted. Additionally, operation, repair, and maintenance costs and factors that impact Durability and Replacement Costs are examined. Finally economic analysis tools and methods are examined and compared.

In this paper, we present a review of tax research. We survey four main areas of the literature: (1) the informational role of income tax expense reported for financial accounting, (2) corporate tax avoidance, (3) corporate decision-making including investment, capital structure, and organizational form, and (4) taxes and asset pricing. We summarize the research areas and questions examined to date and what we have learned or not learned from the work completed thus far. In addition, we provide our opinion as to the interesting and important issues for future research.

The Economic Recovery Tax Act of 1981 and the Tax Reform Act of 1986 changed the U.S. income tax structure in a dramatic fashion. In particular, these two reforms reduced the marginal tax rates for married households. In this paper I investigate what part of the rise in labor force participation of married women between 1980 to 1990 (a rise of 13 percentage points) can be accounted by the changes in taxes. I build an heterogeneous agent model populated by married households. Households differ by age and educational attainment levels of their members and decide whether the second earner, the wife, should participate in the labor market. I select parameter values so that the model economy is consistent with the 1980 U.S. economy in terms of income tax structure, wages (skill premium and gender gap), marital sorting (who is married with whom), and female labor force participation. Using counterfactual experiments I find that 20–24 percent of the rise in married female labor force participation is accounted for by the changes in the income tax structure. Changes in wages account for 62–64 percent, and changes in marital sorting account for 14–16 percent of the rise in the participation rate of married women.

Publisher Summary This chapter focuses on the IAS 12 standard, which prescribes the accounting treatment for income taxes, for both current and future tax consequences. It includes all domestic and foreign taxes based on taxable profits, however it does not cover government grants. According to this standard, the current tax for the current and prior periods should be recognized immediately as a liability and if the amount paid exceeds the amount due, then the excess should be recognized as an asset. The benefit relating to a tax loss that can be carried back to recover current tax of a previous period should be recognized as an asset and at each balance sheet date, the company should reassess unrecognized deferred tax assets. A company should recognize a deferred tax asset only where it is probable that the temporary difference will reverse in the foreseeable future, and the taxable profit will be available against which the temporary difference can be utilized. Current tax liabilities and assets should be based on tax rates enacted by the balance sheet date and they should be measured at tax rates that are expected to apply to the period when the asset is realized or liability settled. Whenever different tax rates apply, average rates should be applied. The measurement of deferred tax liabilities and assets should also reflect the tax consequences that would follow from the manner in which the company expects, at the balance sheet date, to recover or settle the carrying amount of its assets and liabilities.

Publisher Summary This chapter focuses on the various tax laws affecting the operations of a company. The tax laws are set out in a variety of Acts of Parliament, many of them longstanding, and the HM Revenue and Customs issues various statements to clarify the application and interpretation of the legislation and to identify areas where some relaxation of the provisions may be permitted. Corporation tax is chargeable on the profits and gains of a UK-resident company, regardless of where they arise and companies not resident in the UK are chargeable to corporation tax on profits arising in the UK from a business or trade carried on through a branch or agency. Corporation tax is chargeable at a fixed rate for each financial year, which runs from 1 April to 31 March and it is assessed on profits and gains arising in a corporation tax accounting period, which cannot exceed 12 months. Under the Corporation Tax Self-Assessment (CTSA) regime, each company is required to calculate its own tax liability and notify this to HM Revenue and Customs, which, in turn, has a fixed period in which to enquire into the details submitted. The payment of advance corporation tax (ACT) on distributions has been abolished, but companies are still permitted to offset any unused ACT against their corporation tax liabilities. VAT is charged on taxable supplies of goods and services made by a taxable person in the ordinary course of business and on certain imports of goods and services. The time of supply determines the period in which the related VAT must be accounted for, and a business which makes both taxable and non-taxable supplies is partially exempt and must apply an apportionment process to calculate recoverable input tax.

This chapter reviews tax research related to domestic and multinational capital structure, debt maturity, payout policy, compensation policy, risk management, earnings management, leasing, pensions, R&D partnerships, tax shelters, transfer pricing, and organizational form. For each topic, the theoretical arguments explaining how taxes can affect corporate decision making and firm value are reviewed, followed by a summary of the related empirical evidence and a discussion of unresolved issues. Tax research generally supports the hypothesis that high-tax rate firms pursue policies that provide tax benefits. Many issues remain unresolved, however, including understanding whether tax effects are of first-order importance, why firms do not pursue tax benefits more aggressively, and whether investor-level taxes affect corporate actions.

We present an endogenous growth model to study the growth effects of the composition of government expenditure and the associated tax burden. When we use data from a set of 23 OECD countries during 1970-2000, our econometric results support the predictions of the theory. The share of productive government expenditure is associated with higher growth, and this result is more robust when we use effective average tax rates and statutory tax rates as measures of the tax burden. With respect to the tax burden, different tax rates have different growth effects. European Journal of Political Economy

This chapter provides an overview of the nature of state and federal subsidies to higher education and the empirical evidence on the impacts on students' college enrollment decisions. The discussion includes a brief discussion of the incentives created by federal and state subsidies for institutions and for students, a summary of trends in enrollment rates by race and income, a survey of the empirical evidence on the impacts of financial aid policies, and a discussion of the possible role supply constraints may have played on the rise in the payoff to schooling over the last two decades.

Every jurisdiction has its own tax policies and rates, as well as procedures and means of enriching the government's coffers. While there is a myriad of taxes, only two of them are of interest in this appendix, because they are the only ones that may be applicable to transactions involving derivative instruments and structured products: Wealth tax, and

Publisher Summary This chapter discusses that CO 2 -based enhanced oil recovery (CO 2 -EOR) offers an opportunity to combine two high priority national and international objectives, namely: increase world oil supplies and safely store CO 2 emissions. As such, the oil production industry could become a major customer and market for CO 2 emissions captured from electric power plants and industrial sources. The chapter examines and updates the CO 2 -EOR and CO 2 storage potential for the U.S. and selected other oil producing countries. It sets forth a series of “basin strategies” that would stimulate this dual energy and environmental activity in the major oil basins of the world. A field-by-field data base and an updated reservoir and economic model provide the foundation for this analysis. The chapter mainly focuses on two topics: the impact of incentives, such as carbon credits or tax credits, on the outlook and economics of CO 2 - EOR and CO 2 storage; and, the role that public-private partnerships and progress in technology can and needs to have on expanding the reservoir capacity and fields favorable for EOR and CO 2 storage.

Public finance economists have been concerned with the HTT sector for a long time, but the research on this subject has not generally taken a comprehensive view. Most analysts have concentrated on a particular piece of the story. This contribution is attempted to pull many of these pieces together. In this summary paper, I draw on research in this area, and from the papers in this volume, to expand the discussion of four questions: (a) Who are the hard-to-tax? (b) What are the implications of not taxing this sector? (c) Can we measure the impact of the HTT sector tax on revenue performance? and (d) Is the tax administration system in the typical developing economy capable of reaching this segment of the population? The focus in this paper is mostly on the developing and transition economies.

As a public sector project carried out by the tax-administering agency, pursuing the hard-to-tax is subject to a cost–benefit analysis. However, the intrinsic uncertainty of this project and the endogenous dynamic relationship between costs and benefits make the standard model of cost–benefit analysis cumbersome and barely applicable. Two handy techniques may be used instead. One, encompassed by the concept of marginal efficiency cost of funds, is built around the expected return on the inspector's time invested in the audit process. The second technique is Feinstein's econometric detection controlled estimation model, which is used to estimate the extent of tax non-compliance.

This contribution examines the results of the measures aimed at taxing the unrecorded sector in some sub-Saharan African countries (Benin and Burkina Faso). Then, specific strategies are proposed in order to tax the informal micro-activities and tax evasion activities, respectively. These strategies imply some specific tax measures widely implemented in sub-Saharan African countries, such as withholding profit tax. Some new measures, in particular a drastically simplified business tax for informal micro-activities, could be useful. With respect to tax collections we suggest several approaches to improving enforcement.

Within an economy, tax compliance behavior falls along a continuum. At one extreme are households who fully report and pay their tax obligations despite any opportunities or incentives to cheat (‘easy to tax’). At the other extreme are households who undertake considerable efforts to conceal their income and repudiate their tax responsibilities (‘hard to tax’). Using our micro-simulation database, we develop a preliminary map of where members of 34 distinct occupational groups fall along the US tax compliance continuum.

The paper first discusses the growth of the SME sector in the region and its impact on tax policy and tax administration. It then describes approaches chosen by different countries in the region to reduce the tax burden and compliance costs for SMEs. The paper looks at policy changes in Georgia, Ukraine, Russia, and Albania and analyzes their motives and impact. In the final section the paper shows that, despite the often very generous tax reductions offered by simplified regimes, these regimes have not significantly altered the tax behavior of SME operators.

This paper covers the use (and abuse) of presumptive taxes in general. In this paper, we define more precisely the intended objectives of such systems. We review two simplified regimes – those in Ukraine and Russia. We also analyze the implications of these special regimes in terms of their impact on economic efficiency, equity, and overall tax administration and compliance. This paper provides a discussion of the critical problem of developing an exit strategy from such special regimes as well as some alternative policies that may prove more promising paths to taxing the HTT.

Publisher Summary This chapter presents the mean-reverting process matters for research and development (R&D) investment decisions: no matter whether the external effect is internalized or not, as the speed of mean reversion increases, the incentive to invest is raised because the long-run variance of the technology-shift factor is dampened. The incentive to invest is raised because the long-run variance of the technology-shift factor is dampened. The return to R&D capital is driven by a technological factor that follows a mean-reverting process. R&D capital also exhibits both irreversibility and externality through the learning-by-doing effect. The optimal paths for R&D capital under both the decentralized and centralized economies are derived and then compared. It is found that an equal rate of investment tax credits should be given to both costlessly reversible investments and irreversible ones, and this common rate is unrelated to the parameters that characterize the mean-reverting process. When R&D capital exhibits externality, then market outcomes will be inefficient. The role of externality is to raise the optimal stock of R&D capital.

In this survey, we review research on tax policy and business investment with four objectives. First, we use a simple prototypical dynamic neoclassical investment model to derive and explain effects of taxation on business investment in the long run and short run. Second, we describe and evaluate empirical tests of neoclassical channels, and we conclude that recent empirical evidence is consistent with neoclassical intuition. Third, we explore qualifications to basic theoretical models and their empirical tests raised by recent research on irreversibility and capital-market imperfections. Finally, we evaluate arguments for and against using tax policy to influence the level or timing of investment. While there is a consensus about the nature and magnitude of tax policy on investment demand considerable uncertainty remains regarding the structure of adjustment costs and the short-run dynamic effects of tax reforms. Consistent with our analysis of equilibrium investment outcomes, ascertaining the effects of tax policy on equilibrium investment requires additional research to examine responsiveness of interest rates, output, and the stock market to tax policy changes.

This chapter presents a discussion on the theory and measurement of tax incidence. When a tax is levied on an economic agent, the agent is said to bear the impact of the tax that equals to the amount of the tax payment. Economists distinguish the impact of a tax from the incidence or burden of a tax because the pattern of tax payments may not be a very good measure of the true economic burdens arising from a tax. The incidence or burden of a tax incorporates both the initial impact of the tax and the gains and losses associated with the general equilibrium market reactions to the tax. As such, the incidence and not the impact of a tax is the central concept of interest in either a normative or a positive distributional theory of taxation. The chapter focuses on the methodological differences in the measurement of tax incidence. Empirical studies of individual taxes are fraught with controversy because the empirical analysis of tax incidence is inherently difficult and there exist serious methodological differences among experts in the field on the appropriate theoretical approaches to the measurement of incidence. There are three distinct theoretical measures of incidence that commonly appear in the literature: incidence as impact, incidence as changes in certain relative prices, and incidence as changes in welfare.

This chapter reviews the concepts, methods, and results of studies that analyze the incidence of taxes. The purpose of such studies is to determine how the burden of a particular tax is allocated among consumers through higher product prices, workers through a lower wage rate, or other factors of production through lower rates of return to those factors. The methods might involve simple partial equilibrium models, analytical general equilibrium models, or computable general equilibrium models. In a partial equilibrium model, the burden of a tax is shown to depend on the elasticity of supply relative to the elasticity of demand. Partial equilibrium models also are used to consider cases with imperfect competition. In a two-sector general equilibrium model, a tax might be imposed on either commodity, on either factor of production, or on a factor used in one sector. The original use of this model is to analyze the corporate income tax as a tax on capital used only in one sector, the corporate sector. The model can be used to show when the burden falls only on capital or when the burden is shared with labor. The model also has been applied to the property tax, and results of the model have been used to calculate the overall burden on each income group. Because the total stock of capital is fixed in that model, however, dynamic models are required to show how a tax on capital affects capital accumulation, future wage rates, and overall burdens. Such models might also provide analytical results or computational results. The most elaborate recent models calculate the lifetime incidence of each group. Finally, the chapter reviews the use of such incidence methods and results in the policy process.

Proper tax planning is often critical to the success or failure of international operations. Some companies, particularly early in international expansion, will try to structure their operations to assure that taxes are paid only in the home market. Longer-term oriented global companies, however, will try to minimize their tax liabilities by strategies that attempt, to the extent possible, to move profits into lower tax jurisdictions.

This paper examines the role of public provision of goods as a redistributive mechanism when tax policies are designed optimally on the basis of the information available to the government. We characterize Pareto-efficient allocations that are attainable through the tax policy, and derive the conditions under which public provision will enhance welfare above the maximum that can be achieved through a mix of a general income tax and commodity taxes (price subsidies). First, when there are two produced goods, we prove that public provision is always Pareto-improving. The improvement is achieved through changing individuals' actual consumption levels. Second, with no restrictions on the number of goods, we derive a sufficient condition for public provision to be Pareto-improving. This is achieved by weakening self-selection constraints so that welfare improving tax changes are made possible. Suitable examples include provision of day care, basic health care and rights to a minimum old age pension.