A model of corporate financial policy (debt-equity ratios and dividend payout rates) is included ... more A model of corporate financial policy (debt-equity ratios and dividend payout rates) is included in the Harberger general equilibrium model of incidence of the corporate income tax. Illustrative calcultions of the distortions of financial policy and increases in risk premiums induced by the corporate tax are provided. Because risk premiums on corporate securities would be reduced, eliminating the corporate tax or integrating it into the personal tax would increase the income of noncorporate investors relatively more than that of investors in corporate securities, and is therefore less regressive than is commonly thought.
The Andrew Young School of Policy Studies was established at Georgia State University with the ob... more The Andrew Young School of Policy Studies was established at Georgia State University with the objective of promoting excellence in the design, implementation, and evaluation of public policy. In addition to two academic departments (economics and public administration), the Andrew Young School houses seven leading research centers and policy programs, including the International Center for Public Policy. The mission of the International Center for Public Policy is to provide academic and professional training, applied research, and technical assistance in support of sound public policy and sustainable economic growth in developing and transitional economies. The International Center for Public Policy at the Andrew Young School of Policy Studies is recognized worldwide for its efforts in support of economic and public policy reforms through technical assistance and training around the world. This reputation has been built serving a diverse client base, including the World Bank, the U.S. Agency for International Development (USAID), the United Nations Development Programme (UNDP), finance ministries, government organizations, legislative bodies and private sector institutions. The success of the International Center for Public Policy reflects the breadth and depth of the in-house technical expertise that the International Center for Public Policy can draw upon. The Andrew Young School's faculty are leading experts in economics and public policy and have authored books, published in major academic and technical journals, and have extensive experience in designing and implementing technical assistance and training programs. Andrew Young School faculty have been active in policy reform in over 40 countries around the world. Our technical assistance strategy is not to merely provide technical prescriptions for policy reform, but to engage in a collaborative effort with the host government and donor agency to identify and analyze the issues at hand, arrive at policy solutions and implement reforms. The International Center for Public Policy specializes in four broad policy areas: Fiscal policy, including tax reforms, public expenditure reviews, tax administration reform Fiscal decentralization, including fiscal decentralization reforms, design of intergovernmental transfer systems, urban government finance Budgeting and fiscal management, including local government budgeting, performancebased budgeting, capital budgeting, multi-year budgeting Economic analysis and revenue forecasting, including micro-simulation, time series forecasting, For more information about our technical assistance activities and training programs, please visit our website at
Indicates why income tax is inevitably complicated and discusses why the 1986 Act is both more an... more Indicates why income tax is inevitably complicated and discusses why the 1986 Act is both more and less complicated than an income tax with a definition of taxable income even closer to the ideal of real economic income. Describes an alternative consumption-based direct tax.
This article describes generic forces creating uniformity and diversity in state corporate income... more This article describes generic forces creating uniformity and diversity in state corporate income taxes, examines several episodes in the evolution of these taxes to determine how uniformity-or the lack thereof-came about, and discusses whether the Uniform Division of Income for Tax Purposes Act is likely to be revised to make it more sensible and more comprehensive. The episodes examined involve the defi nition of income, the choice of methods of dividing income among the states, jurisdiction to tax, apportionment formulas, and combination of the activities of related entities. The article does not discuss harmonization of tax rates.
... The value-added tax: Key to deficit reduction? Post a Comment. CONTRIBUTORS: Author: McLure, ... more ... The value-added tax: Key to deficit reduction? Post a Comment. CONTRIBUTORS: Author: McLure, Charles E. ... VOLUME/EDITION: PAGES (INTRO/BODY): xi, 184 p. SUBJECT(S): Value-added tax; Budget deficits; United States. DISCIPLINE: No discipline assigned. ...
This article describes what representatives of the foreign organizations advising the Government ... more This article describes what representatives of the foreign organizations advising the Government of Kazakhstan on tax reform (the IMF, OECD, the EU, US Treasury Department, USAID, the law firm of Skadden Arps, and the International Tax and Investment Center (a tiny new non-profit organization) and their local counterparts did to create the new tax law. Also, it provides a “roadmap” to documents produced by these organizations and the Ministry that were donated to the Hoover Institution Archives at Stanford University in March 2019. Finally, it speculates on why the large tax reform organizations provided coordinated advice, without institutional jealousies getting in the way.
Countries emerging from socialism lack the accounting practices, the tax administraitioni, and th... more Countries emerging from socialism lack the accounting practices, the tax administraitioni, and the experience with tax compliance to make an income tax work. A consumption-based direct taxthe simplified alternative tax proposed heremight be more effective. The Policy, Research. and Extemal Affairs Complcx distohutes I'RI: Working IPapcrs todisscruaL tLhe findings of Nvork in progress and to encourage thc cxchange of ideas among llaiik staff and all others interested in development issues 'I'hec
* The author is assistant professor of economics at Rice University. While responsibility for thi... more * The author is assistant professor of economics at Rice University. While responsibility for this paper's contents rests solely with him, he would like to thank the Ford Foundation for the Faculty Research Fellowship which facilitated completion of the final drafts of it and Mr. Lovell S. Jarvis and Mr. Robert H. Floyd for their comments on an earlier draft. 1 Richard W. Lindholm, "National Tax System and International Balance of Payments/' National Tax Journal , June 1966, pp. 163-72; Vito Tanzi, "Tax Systems and Balance of Payments: An Alternative Analysis," and "Rejoinder" by Lindholm, National Tax Journal , March 1967, pp. 39-44 and 45-48, respectively. ¿ bee tor example Robert Z. Aliber and Herbert Stein, "The Price of U.S. Exports and the Mix of U.S. Direct and Indirect Taxes," American Economic Review , September 1964, pp. 703-11. Other relevant literature is cited below. 3 Border tax adjustments are described and discussed in Milton Leontiades, "The Logic of Border Taxes," National Tax Jaurnal , June 1966, pp. 173-83, and in Lindholm, "National Tax Systems." * Lmdholm, ibtd. This argument is presented in detail below. members of the EEC make relatively heavy use of rebatable indirect taxes, while the U.S., the U.K., and Sweden make relatively heavy use of direct taxes, with Japan and Canada being somewhere between these groups. From this he concludes that the international payments positions of the nations in the second group are weakened by their tax structures.5
IN tax several exporting articles (McLure, on tax 1967, incidence 1978, 1979, and tax xporting (M... more IN tax several exporting articles (McLure, on tax 1967, incidence 1978, 1979, and tax xporting (McLure, 1967, 1978, 1979, and 1980 and Gillis and McLure, 1975) I have stressed the role played by domination of the national market by the taxing state as a determinant of the incidence of production taxes.1 Yet in theoretical analysis done earlier (McLure, 1964), I indicated only that the effects state production taxes have on prices depend on the slopes of supply and demand curves in various states and the nation as a whole. While correct, the statements in terms of slopes of curves unfortunately obscure the role played by state dominance. This note is intended to clarify that role by framing the analysis in terms of elasticities of supply and demand and market shares of the taxing and non-taxing states.2 Consider the effect a production excise levied in only one state has on the national price of an item produced in a competitive industry.3 The fraction of the tax that will be reflected in higher prices, and therefore potentially exportable to consumers in other states, F, is given by the following expression:
As often interpreted, the new view of the incidence of the property tax is largely irrelevant for... more As often interpreted, the new view of the incidence of the property tax is largely irrelevant for many questions of public policy. That is, most changes in property taxes are local changes, not nationwide changes. Local changes involve primarily excise effects, analogous to those of the old view, rather than the incidence on capital suggested by incautious users of the new view. The final purpose of this note is to explain how the excise effects that occur when each locality imposes a property tax combine to produce a burden on capital and no excise effects when all localities impose the tax.
I do not actually discuss this nutty feature in McLure (2002), but do so in many other places, in... more I do not actually discuss this nutty feature in McLure (2002), but do so in many other places, including Hellerstein and McLure (2004), which provides further references.
I. Introduction, 254. — II. The model, 255. — III. Relative prices and tax incidence, 257. — IV. ... more I. Introduction, 254. — II. The model, 255. — III. Relative prices and tax incidence, 257. — IV. The analysis of the model, 259. — V. Concluding remarks, 265.
A model of corporate financial policy (debt-equity ratios and dividend payout rates) is included ... more A model of corporate financial policy (debt-equity ratios and dividend payout rates) is included in the Harberger general equilibrium model of incidence of the corporate income tax. Illustrative calcultions of the distortions of financial policy and increases in risk premiums induced by the corporate tax are provided. Because risk premiums on corporate securities would be reduced, eliminating the corporate tax or integrating it into the personal tax would increase the income of noncorporate investors relatively more than that of investors in corporate securities, and is therefore less regressive than is commonly thought.
The Andrew Young School of Policy Studies was established at Georgia State University with the ob... more The Andrew Young School of Policy Studies was established at Georgia State University with the objective of promoting excellence in the design, implementation, and evaluation of public policy. In addition to two academic departments (economics and public administration), the Andrew Young School houses seven leading research centers and policy programs, including the International Center for Public Policy. The mission of the International Center for Public Policy is to provide academic and professional training, applied research, and technical assistance in support of sound public policy and sustainable economic growth in developing and transitional economies. The International Center for Public Policy at the Andrew Young School of Policy Studies is recognized worldwide for its efforts in support of economic and public policy reforms through technical assistance and training around the world. This reputation has been built serving a diverse client base, including the World Bank, the U.S. Agency for International Development (USAID), the United Nations Development Programme (UNDP), finance ministries, government organizations, legislative bodies and private sector institutions. The success of the International Center for Public Policy reflects the breadth and depth of the in-house technical expertise that the International Center for Public Policy can draw upon. The Andrew Young School's faculty are leading experts in economics and public policy and have authored books, published in major academic and technical journals, and have extensive experience in designing and implementing technical assistance and training programs. Andrew Young School faculty have been active in policy reform in over 40 countries around the world. Our technical assistance strategy is not to merely provide technical prescriptions for policy reform, but to engage in a collaborative effort with the host government and donor agency to identify and analyze the issues at hand, arrive at policy solutions and implement reforms. The International Center for Public Policy specializes in four broad policy areas: Fiscal policy, including tax reforms, public expenditure reviews, tax administration reform Fiscal decentralization, including fiscal decentralization reforms, design of intergovernmental transfer systems, urban government finance Budgeting and fiscal management, including local government budgeting, performancebased budgeting, capital budgeting, multi-year budgeting Economic analysis and revenue forecasting, including micro-simulation, time series forecasting, For more information about our technical assistance activities and training programs, please visit our website at
Indicates why income tax is inevitably complicated and discusses why the 1986 Act is both more an... more Indicates why income tax is inevitably complicated and discusses why the 1986 Act is both more and less complicated than an income tax with a definition of taxable income even closer to the ideal of real economic income. Describes an alternative consumption-based direct tax.
This article describes generic forces creating uniformity and diversity in state corporate income... more This article describes generic forces creating uniformity and diversity in state corporate income taxes, examines several episodes in the evolution of these taxes to determine how uniformity-or the lack thereof-came about, and discusses whether the Uniform Division of Income for Tax Purposes Act is likely to be revised to make it more sensible and more comprehensive. The episodes examined involve the defi nition of income, the choice of methods of dividing income among the states, jurisdiction to tax, apportionment formulas, and combination of the activities of related entities. The article does not discuss harmonization of tax rates.
... The value-added tax: Key to deficit reduction? Post a Comment. CONTRIBUTORS: Author: McLure, ... more ... The value-added tax: Key to deficit reduction? Post a Comment. CONTRIBUTORS: Author: McLure, Charles E. ... VOLUME/EDITION: PAGES (INTRO/BODY): xi, 184 p. SUBJECT(S): Value-added tax; Budget deficits; United States. DISCIPLINE: No discipline assigned. ...
This article describes what representatives of the foreign organizations advising the Government ... more This article describes what representatives of the foreign organizations advising the Government of Kazakhstan on tax reform (the IMF, OECD, the EU, US Treasury Department, USAID, the law firm of Skadden Arps, and the International Tax and Investment Center (a tiny new non-profit organization) and their local counterparts did to create the new tax law. Also, it provides a “roadmap” to documents produced by these organizations and the Ministry that were donated to the Hoover Institution Archives at Stanford University in March 2019. Finally, it speculates on why the large tax reform organizations provided coordinated advice, without institutional jealousies getting in the way.
Countries emerging from socialism lack the accounting practices, the tax administraitioni, and th... more Countries emerging from socialism lack the accounting practices, the tax administraitioni, and the experience with tax compliance to make an income tax work. A consumption-based direct taxthe simplified alternative tax proposed heremight be more effective. The Policy, Research. and Extemal Affairs Complcx distohutes I'RI: Working IPapcrs todisscruaL tLhe findings of Nvork in progress and to encourage thc cxchange of ideas among llaiik staff and all others interested in development issues 'I'hec
* The author is assistant professor of economics at Rice University. While responsibility for thi... more * The author is assistant professor of economics at Rice University. While responsibility for this paper's contents rests solely with him, he would like to thank the Ford Foundation for the Faculty Research Fellowship which facilitated completion of the final drafts of it and Mr. Lovell S. Jarvis and Mr. Robert H. Floyd for their comments on an earlier draft. 1 Richard W. Lindholm, "National Tax System and International Balance of Payments/' National Tax Journal , June 1966, pp. 163-72; Vito Tanzi, "Tax Systems and Balance of Payments: An Alternative Analysis," and "Rejoinder" by Lindholm, National Tax Journal , March 1967, pp. 39-44 and 45-48, respectively. ¿ bee tor example Robert Z. Aliber and Herbert Stein, "The Price of U.S. Exports and the Mix of U.S. Direct and Indirect Taxes," American Economic Review , September 1964, pp. 703-11. Other relevant literature is cited below. 3 Border tax adjustments are described and discussed in Milton Leontiades, "The Logic of Border Taxes," National Tax Jaurnal , June 1966, pp. 173-83, and in Lindholm, "National Tax Systems." * Lmdholm, ibtd. This argument is presented in detail below. members of the EEC make relatively heavy use of rebatable indirect taxes, while the U.S., the U.K., and Sweden make relatively heavy use of direct taxes, with Japan and Canada being somewhere between these groups. From this he concludes that the international payments positions of the nations in the second group are weakened by their tax structures.5
IN tax several exporting articles (McLure, on tax 1967, incidence 1978, 1979, and tax xporting (M... more IN tax several exporting articles (McLure, on tax 1967, incidence 1978, 1979, and tax xporting (McLure, 1967, 1978, 1979, and 1980 and Gillis and McLure, 1975) I have stressed the role played by domination of the national market by the taxing state as a determinant of the incidence of production taxes.1 Yet in theoretical analysis done earlier (McLure, 1964), I indicated only that the effects state production taxes have on prices depend on the slopes of supply and demand curves in various states and the nation as a whole. While correct, the statements in terms of slopes of curves unfortunately obscure the role played by state dominance. This note is intended to clarify that role by framing the analysis in terms of elasticities of supply and demand and market shares of the taxing and non-taxing states.2 Consider the effect a production excise levied in only one state has on the national price of an item produced in a competitive industry.3 The fraction of the tax that will be reflected in higher prices, and therefore potentially exportable to consumers in other states, F, is given by the following expression:
As often interpreted, the new view of the incidence of the property tax is largely irrelevant for... more As often interpreted, the new view of the incidence of the property tax is largely irrelevant for many questions of public policy. That is, most changes in property taxes are local changes, not nationwide changes. Local changes involve primarily excise effects, analogous to those of the old view, rather than the incidence on capital suggested by incautious users of the new view. The final purpose of this note is to explain how the excise effects that occur when each locality imposes a property tax combine to produce a burden on capital and no excise effects when all localities impose the tax.
I do not actually discuss this nutty feature in McLure (2002), but do so in many other places, in... more I do not actually discuss this nutty feature in McLure (2002), but do so in many other places, including Hellerstein and McLure (2004), which provides further references.
I. Introduction, 254. — II. The model, 255. — III. Relative prices and tax incidence, 257. — IV. ... more I. Introduction, 254. — II. The model, 255. — III. Relative prices and tax incidence, 257. — IV. The analysis of the model, 259. — V. Concluding remarks, 265.
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