As the federal deficit rises in the United States, interest in a consumption tax system or the value added tax (VAT) also increases. This investigation attempts to determine the short-run impacts of a value added tax upon private forest management. A literature review investigates the theoretical economic impacts of a VAT and experience with the tax in other countries. Then supply and demand functions in both the southern pine sawtimber stumpage and new single-facility housing sector are empirically derived. These functions are used to determine the short-run housing price elasticities of the quantity of houses sold and the price and quantity of stumpage sold. From this, the impact of a VAT-induced housing price change is determined, and simulation with different VAT rates are performed. Based on housing markets alone, it is found that a VAT is likely to cause a short-run reduction in sawtimber stumpage price and quantity demanded which is less than 1/10 percent of the VAT rate. / M.S.

The purpose of this study is to examine the impacts of state income taxes on returns to investments in forest management on private nonindustrial (PNIF) lands. It contains a review of major federal income tax provisions which directly affect timber investments. Income tax laws are described for individuals in the 50 states, with emphasis on those directly applicable to forestry. Two separate analyses are performed to examine the combined effects of federal and state income taxes on typical nonindustrial private forestry investments. In the first, the combined federal-state income tax liability is computed for hypothetical PNIF owners in the year of a timber sale. State income taxes for medium income landowners who manage their forest range from 4 percent of the total tax liability in Louisiana to 40 percent in Wisconsin. In the second analysis, after-tax returns are computed for a hypothetical forest management investment. The net present value of the investment for a landowner in the 33 percent federal and 10 percent state marginal tax brackets, ranges from $479 per acre in Wisconsin to $551 per acre in Oregon. The results show that provisions for long-term capital gains treatment, amortization of reforestation costs, and the deduction of annual operating expenses can be an effective means for reducing the impacts of federal and state income taxes on PNIF investment returns. North Carolina, California, and Oregon have special provisions for reporting forestry management cash flows which help reduce state taxes. It is important for investors to keep complete and accurate records in order to take full advantage of federal and state tax saving provisions. / Master of Science

Nearly all traditional charitable-giving studies conclude donors are more responsive to price-reducing charitable deductions (the price effect) than they are to income-reducing tax payments (the income effect). Thus, taxes stimulate giving. In addition, this empirical evidence also indicates that the charitable deduction is treasury efficient. This traditional understanding was recently challenged by studies employing observations on the same individuals across time (panel data). These panel studies provide evidence which suggest that donors are either much more responsive to income reducing tax payments than they are to price-reducing charitable deductions or just as responsive to both. Further, price elasticity estimates are much greater than negative one. Thus, the deduction is inefficient and giving is either neutral to, or inhibited by, taxes. / Ph. D.

The level of taxpayer compliance has steadily decreased over the years. Individual taxpayers failed to report approximately $100 billion in federal taxes due on legal income received in 1989. The compliance gap is large enough to greatly reduce the federal government deficit. Studies employing psychological cognitive structure approaches to analyzing taxpayer compliance and attempting to increase taxpayer compliance employ theories related to equity sensitivity, attitude formation, and change. These studies generally examine relationships between compliance and socioeconomic and situational variables. Appeals to a taxpayer's moral obligation to pay taxes have been studied as a means to change taxpayer attitudes and intentions and thereby increase compliance. The present study sought to determine if taxpayer compliance could be enhanced by sanction threats or by appeals to conscience. The study also endeavored to discover if compliance differed between various types of taxpayers. These individual differences were posited to cause taxpayers to react differently to alternative types of interventions aimed at increasing compliance to income tax law. A laboratory study was designed to gauge a subject's sensitivity to equity, administer intervention techniques, and measure compliance and attitude toward taxation. The data were analyzed using Multivariate Analysis of Variance (MANOVA). Although the results of the study showed no significant main effect for treatment type, a significant main effect (p = .0075) was found for Equity Sensitivity type when the scenario depicting Overstating Business Expenses was the dependent variable in the design. There were no significant main effects for Equity Sensitivity type or treatment type when the six attitude items were used as the dependent variables in a MANOVA. / Ph. D.

This dissertation investigates the economic impact of the Tax Reform Act of 1986, one of the most far-reaching pieces of tax legislation in American history. The focus is on differential effects of the Act across industries. Event study methodology is used. A model is created which links tax law provisions, firms’ cash flows, and securities returns. Hypotheses are developed for seven industries, based upon analysis of the provisions of the Act and upon reading of contemporaneous expert commentary. The sample consists of firms in those industries trading over-the-counter. Evidence of an adverse impact for the Act as a whole on the steel and machine tool industries is found. It is concluded that the Tax Reform Act of 1986 caused a shift in economic resources away from those industries, and that shareholders of firms in those industries suffered losses of wealth. In addition, it is determined that the uniform capitalization rules for inventory adversely affected the retailing industry, and that the change in loan loss reserve rules adversely affected large banks. The latter set of findings emphasizes the substantive importance of tax accounting rules. With regard to event study methodology, it is found that non-synchronous trading in over-the-counter stocks poses a severe problem when attempting to use the market model. A methodological modification suggested by Dimson is shown to be ineffective in dealing with this problem. Alternatives to the market model are identified, and are used in analysis. Most significant reactions are found when abnormal returns are pooled over events, supporting an expectations-revision model of market reaction. / Ph. D.

Section 263A was one of the largest revenue raising provisions enacted in the Tax Reform Act of 1986. Little empirical research regarding the impact of this tax law change has been conducted. The primary objective of this study was the empirical assessment of Section 263A to determine its relative impact on firms of different sizes, inventory methods and industries. Section 263A has been criticized for its complex rules which impose high compliance costs on affected firms. The secondary objective of this study was evaluation of simplification proposals to determine if simpler rules could be enacted that would have an impact similar to Section 263A yet reduce compliance costs. Corporate tax return data for taxable years 1986 and 1987 were analyzed to identify firms that were severely impacted by Section 263A. The results show the tax burden from this law change fell more heavily on small firms not electing the Last-In-First-Out inventory method. In addition, wholesalers paid relatively more tax than retailers. These firms have a relatively stronger incentive to react to Section 263A by reducing inventories, relocating their production and distribution facilities outside the United States and/or restructuring their investments away from production and distribution activities towards activities in the service sector. Reactions by these firms have potential adverse consequences on the U.S. economy. Four proposals for simplifying Section 263A rules were evaluated by simulating the impact of these proposals on the taxable income of affected firms. Use of an individual firm capitalization ratio for all future years based a firm's average ratio for the first three years Section 263A was in effect appeared superior to other proposals. The results show there is potential for decreasing the complexity of Section 263A without reducing current tax revenues. / Ph. D.

This study is designed to analyze and compare the private annuity and installment sale transaction from an estate planning perspective. This comparison is to be made in the environment of gifting and other likely assumptions. The research is broken into three separate parts. The first portion is a careful examination of the tax aspects of both transactions. The second portion is the discussion and documentation of the models themselves. The third portion is a discussion of the output, its implications and a comparison of both techniques. The 1976 Tax Reform Act caused definite changes in the areas of estate planning; these changes required planners to look at other techniques to accomplish what had once been done with gifting. This study looks at the private annuity and installment sale transaction in that light. A private annuity is a sale, generally between family members, of property in return for a fixed payment for the remainder of the life of the transferor. An installment sale is now the method used for reporting gain on a sale where the payment extends further than the current tax year. Both of these methods may be used to transfer property prior to death as estate planning techniques. A comparison of both alternatives shows that generally the private annuity is more favorable for a younger transferor or one with a shorter expected life. The installment sale is generally more favorable for an older transferor with a longer expected life. All the planning methods were more favorable than doing nothing and the model shows an optimal point for gifting dependent upon the unified credit. The study shows promise for quantification in the area of taxation. The research would have been impossible if the large data base could not have been generated through use of computer simulation of the transactions. As the technology becomes more available the use of quantification techniques similar to those utilized in this study will increase.

No description available.

The debate over federal income tax treatment of home mortgage interest (HMI) has largely overlooked an important, and possibly unintended political and economic consequence of our federal income tax system. The distribution of the for home mortgage interest deduction tax benefit across states is a possible missing consideration. Specifically, this study offers a federalist1 perspective on the federal income tax benefit from the deduction for HMI - one of the largest personal federal tax expenditures on the books. This dissertation analyzes current national political rhetoric from a federalist perspective. Discussion also includes background, current status, and proposed changes to the tax code for of the HMI deduction. First, a Tobit regression is used to analyze the distribution of the HMI tax benefit across states and to test for disproportionate distribution across states in benefit derived from the federal income tax deduction for home mortgage interest beyond that which is explained by income. This initial part of the study is also the precursor to a hierarchical analysis seeking to identify significant factors affecting the distribution of the benefit of the HMI deduction across states. The Ernst and Young/University of Michigan Individual Model File of 1992 tax returns is the primary data source for this initial part of the investigation. The second part of the analysis examines the effect of sets of factors in a causal hierarchy on the HMI deduction benefit. By first controlling for the effects of personal and identifiable state characteristics on HMI deduction benefit, the possible existence of a residual socio-political force is tested. The primary data sources for this part of the study are the 1990 Census of Population and Housing 5% Public Use Microsample as well as tax data extracted from the Statistics of Income, Individual Public Use Tax File, Level III Sample, as well as others. Ridge regression is used for hypothesis testing. Results indicate the existence of a significant difference in the benefit from home mortgage interest deduction across states holding income constant. This study also finds that a set of personal as well as a set of state market, legal and tax characteristics significantly influence the taxpayer's HMI deduction benefit, and that a residual difference in benefit across states after controlling for personal and identified state attributes. Future study should examine the source of residual across state differences (attributed to socio-political differences between states). Federal housing goals may be frustrated as the effective subsidy actually helps support higher home prices in areas where high housing costs may already be a barrier to potential new homeownership. The concepts and techniques applied in this study could easily be applied to other provisions of federal tax, or to any other tax system in a federation for that matter.

This thesis comprises three essays on the international movement of merchandise and people. The first essay measures the effects of foreign aid flows on a donor's merchandise exports. On average, donor countries tie approximately 50% of their foreign aid to exports, but the export stimulation of aid may exceed the amount that is directly tied. This essay uses the gravity model of trade to statistically test the link between aid and export expansion. The results suggest that aid is associated with an increase in exports of goods amounting to 120% of the aid. The essay also makes comparisons among donors and finds that Japan, which has drawn harsh criticism for using aid to gain unfair trade advantages, derives less merchandise exports from aid than the average donor. The second essay investigates the effects of immigration on Canada's pattern of trade. I derive three alternative functional forms capturing the relationship between immigration and trade based on the proposition that immigrants use their superior "market intelligence" to exploit new trade opportunities. I then employ province-level trade data with over 150 trading partners to identify immigrant effects and obtain results suggesting that immigrants account for over 10% of Canada's exports. The third essay addresses the question of whether tax differences contribute toward the brain drain from Canada to the U.S. This essay tests whether the U.S.'s lower taxes draw Canadians south by examining a sample of Canadians living in Canada and a sample of Canadians living in the U.S. Using information from these samples I estimate how much these individuals would earn in the opposite country and estimate the taxes they would pay. I find that the people who have the most to gain in income and in tax-savings are the most likely to choose to live in the U.S., and thus corroborate the claim that tax differences contribute toward Canada's brain drain.