On March 25, 2019, the FASB released Proposed Accounting Standards Update (Revised) concerning Income Taxes (Topic 740). There is a critical need to expand required disclosures for multinational groups (MNCs) under generally accepted accounting principles. Many MNCs carry material tax risks from their adoption over the past several decades of increasingly aggressive and sometimes questionable profit-shifting structures that seriously divorce legal form and reality. This letter submission to the FASB Board discusses: • Background on profit-shifting structures, • Need for CbCR – How CbCR would benefit stakeholders without creating undue compliance issues for MNCs, • Need for guidance on location in connection with new paragraph 740-10-50-10A (disaggregation of income or loss from continuing operations between domestic and foreign), and • Disclosures Concerning Unrecognized Tax Benefits. This letter’s primary message is that multinational corporations currently operate under a range of U.S. and foreign tax exposures, and CbCR information is critical for investors and other users of financial reports to assess: • The potential for material tax assessments, • Possible reputational and other commercial risks that could arise from aggressive tax structures, and • Management’s relative conservatism or aggressiveness with respect to tax matters. The letter encourages FASB to be a leader in developing appropriate accounting standards to increase corporate tax transparency in financial reports. If FASB does not take a leadership role, others including governments, international bodies, and private sector entities will design the global standards mandating increased corporate tax disclosures.
{"title":"Submission Letter to FASB Board Concerning Income Taxes (Topic 740) Proposed Accounting Standards Update (Revised) March 25, 2019","authors":"Jeffery M. Kadet","doi":"10.2139/ssrn.3534302","DOIUrl":"https://doi.org/10.2139/ssrn.3534302","url":null,"abstract":"On March 25, 2019, the FASB released Proposed Accounting Standards Update (Revised) concerning Income Taxes (Topic 740). \u0000 \u0000There is a critical need to expand required disclosures for multinational groups (MNCs) under generally accepted accounting principles. Many MNCs carry material tax risks from their adoption over the past several decades of increasingly aggressive and sometimes questionable profit-shifting structures that seriously divorce legal form and reality. \u0000 \u0000This letter submission to the FASB Board discusses: \u0000 \u0000• Background on profit-shifting structures, \u0000 \u0000• Need for CbCR – How CbCR would benefit stakeholders without creating undue compliance issues for MNCs, \u0000 \u0000• Need for guidance on location in connection with new paragraph 740-10-50-10A (disaggregation of income or loss from continuing operations between domestic and foreign), and \u0000 \u0000• Disclosures Concerning Unrecognized Tax Benefits. \u0000 \u0000This letter’s primary message is that multinational corporations currently operate under a range of U.S. and foreign tax exposures, and CbCR information is critical for investors and other users of financial reports to assess: \u0000 \u0000• The potential for material tax assessments, \u0000 \u0000• Possible reputational and other commercial risks that could arise from aggressive tax structures, and \u0000 \u0000• Management’s relative conservatism or aggressiveness with respect to tax matters. \u0000 \u0000The letter encourages FASB to be a leader in developing appropriate accounting standards to increase corporate tax transparency in financial reports. If FASB does not take a leadership role, others including governments, international bodies, and private sector entities will design the global standards mandating increased corporate tax disclosures.","PeriodicalId":119398,"journal":{"name":"Political Economy - Development: Fiscal & Monetary Policy eJournal","volume":"40 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-02-07","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"116063327","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2020-02-01DOI: 10.4018/978-1-7998-0218-1.ch001
Amir Kia
This chapter analyses the direct impact of a positive rate of interest (usury) on the production possibility curve. Usury under a stationary state creates inefficiency in the sense that the marginal rate of transformation is not equal to the price ratio. Over the short run Pareto efficiency appears when a transition period is considered and the rate of return moving from one state to another is endogenous and equals the rate of investment. In a non-stationary economy, when a positive rate of return (interest) is equal to the growth rate of the economy, there will be a Pareto-efficient equilibrium. But if the interest rate is exogenous to the system, usury exists, and then Pareto efficiency cannot be achieved under any state, either stationary or non-stationary.
{"title":"Positive Interest Rate, Stationary Economy, and Inefficiency","authors":"Amir Kia","doi":"10.4018/978-1-7998-0218-1.ch001","DOIUrl":"https://doi.org/10.4018/978-1-7998-0218-1.ch001","url":null,"abstract":"This chapter analyses the direct impact of a positive rate of interest (usury) on the production possibility curve. Usury under a stationary state creates inefficiency in the sense that the marginal rate of transformation is not equal to the price ratio. Over the short run Pareto efficiency appears when a transition period is considered and the rate of return moving from one state to another is endogenous and equals the rate of investment. In a non-stationary economy, when a positive rate of return (interest) is equal to the growth rate of the economy, there will be a Pareto-efficient equilibrium. But if the interest rate is exogenous to the system, usury exists, and then Pareto efficiency cannot be achieved under any state, either stationary or non-stationary.","PeriodicalId":119398,"journal":{"name":"Political Economy - Development: Fiscal & Monetary Policy eJournal","volume":"8 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-02-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"132276936","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Government debt has risen substantially in emerging market and developing economies (EMDEs) since the global financial crisis. The current environment of low global interest rates and weak growth may appear to mitigate concerns about elevated debt levels. Considering currently subdued investment, additional government borrowing might also appear to be an attractive option for financing growth-enhancing initiatives such as investment in human and physical capital. However, history suggests caution. Despite low interest rates, debt was on a rising trajectory in half of EMDEs in 2018. In addition, the cost of rolling over debt can increase sharply during periods of financial stress and result in financial crises; elevated debt levels can limit the ability of governments to provide fiscal stimulus during downturns; and high debt can weigh on investment and long-term growth. Hence, EMDEs need to strike a careful balance between taking advantage of low interest rates and avoiding the potentially adverse consequences of excessive debt accumulation.
{"title":"Benefits and Costs of Debt: The Dose Makes the Poison","authors":"M. Kose, F. Ohnsorge, Naotaka Sugawara","doi":"10.1596/1813-9450-9166","DOIUrl":"https://doi.org/10.1596/1813-9450-9166","url":null,"abstract":"Government debt has risen substantially in emerging market and developing economies (EMDEs) since the global financial crisis. The current environment of low global interest rates and weak growth may appear to mitigate concerns about elevated debt levels. Considering currently subdued investment, additional government borrowing might also appear to be an attractive option for financing growth-enhancing initiatives such as investment in human and physical capital. However, history suggests caution. Despite low interest rates, debt was on a rising trajectory in half of EMDEs in 2018. In addition, the cost of rolling over debt can increase sharply during periods of financial stress and result in financial crises; elevated debt levels can limit the ability of governments to provide fiscal stimulus during downturns; and high debt can weigh on investment and long-term growth. Hence, EMDEs need to strike a careful balance between taking advantage of low interest rates and avoiding the potentially adverse consequences of excessive debt accumulation.","PeriodicalId":119398,"journal":{"name":"Political Economy - Development: Fiscal & Monetary Policy eJournal","volume":"5 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-02-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"115524466","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Abstract I construct a simple model with sticky prices and interest rate targets, closed by fiscal theory of the price level with long-term debt and fiscal and monetary policy rules. Fiscal surpluses rise following deficits, to repay accumulated debt, but surpluses do not respond to all values of unexpected inflation and deflation. This specification avoids common puzzles and produces reasonable responses to fiscal and monetary policy shocks. It allows an easy translation of any new-Keynesian model, and it allows one to study a whole sample with active fiscal policy.
{"title":"A Fiscal Theory of Monetary Policy with Partially-Repaid Long-Term Debt","authors":"J. Cochrane","doi":"10.2139/ssrn.3531182","DOIUrl":"https://doi.org/10.2139/ssrn.3531182","url":null,"abstract":"Abstract I construct a simple model with sticky prices and interest rate targets, closed by fiscal theory of the price level with long-term debt and fiscal and monetary policy rules. Fiscal surpluses rise following deficits, to repay accumulated debt, but surpluses do not respond to all values of unexpected inflation and deflation. This specification avoids common puzzles and produces reasonable responses to fiscal and monetary policy shocks. It allows an easy translation of any new-Keynesian model, and it allows one to study a whole sample with active fiscal policy.","PeriodicalId":119398,"journal":{"name":"Political Economy - Development: Fiscal & Monetary Policy eJournal","volume":"44 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-02-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"131469338","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Using hand-collected data on corporate bond and stock offerings, we identify the impact of government debt on corporate financing during World War I. The early twentieth century provides a unique opportunity to identify the impact of government debt on private financing because during this period (1) firms announced the amount they wanted to raise before each security offering and (2) the Treasury issued debt in discrete intervals. We identify the impact of Treasury issues by comparing differences in the amount firms offered to the amount they actually raised when the Treasury was borrowing to when the Treasury was not in the market. We find that long term government bond offerings negatively affect both amount of long-term corporate bonds and dividend paying stocks issued. In contrast, we find no effect of government bond offerings on short term debt issue. Our findings suggest that investors view dividend paying stocks as a close substitute for relatively safe long-term bonds.
{"title":"Crowded out from the Beginning: Impact of Government Debt on Corporate Financing","authors":"Çagri Akkoyun, Nuri Ersahin, C. James","doi":"10.2139/ssrn.3528945","DOIUrl":"https://doi.org/10.2139/ssrn.3528945","url":null,"abstract":"Using hand-collected data on corporate bond and stock offerings, we identify the impact of government debt on corporate financing during World War I. The early twentieth century provides a unique opportunity to identify the impact of government debt on private financing because during this period (1) firms announced the amount they wanted to raise before each security offering and (2) the Treasury issued debt in discrete intervals. We identify the impact of Treasury issues by comparing differences in the amount firms offered to the amount they actually raised when the Treasury was borrowing to when the Treasury was not in the market. We find that long term government bond offerings negatively affect both amount of long-term corporate bonds and dividend paying stocks issued. In contrast, we find no effect of government bond offerings on short term debt issue. Our findings suggest that investors view dividend paying stocks as a close substitute for relatively safe long-term bonds.","PeriodicalId":119398,"journal":{"name":"Political Economy - Development: Fiscal & Monetary Policy eJournal","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-01-31","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"122403745","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
A prominent theme in the discourse of international taxation is that taxing rights should follow wealth production. Examples of current attempts to implement such a proposition include the OECD’s BEPS project and the frequently heard calls to adopt some form of international formulary apportionment.
In considering the validity of this proposition, the paper with rely on the familiar dichotomy in moral philosophy between the right and the good. In the context of international taxation, the right involves a host country's deontological claim to receive a portion of the income produced within its borders. The good involves the claim that host countries need revenue from multinational enterprises (MNEs) to fund public goods. Although the literature often conflates these two claims, they are distinct and require separate analysis.
Within the realm of the right, we must make a further distinction between two different types of right-based claims. On the one hand, a host country may assert that MNEs who choose to operate in its territory take upon themselves an implicit contractual obligation to pay tax as delineated in the host country's laws. When the host country imposes an income tax, MNEs are in effect contractually obligated to pay the host country a percentage of the income generated by their economic activity in the host country. Alternatively, the host country may assert a neo-Lockean claim to a commensurate share of the wealth that its social capital – in the broadest possible sense of the term – helped to create.
Regarding the contractual claim, I argue that the terms of the contract are in almost all cases delineated by the host country's tax legislation. In effect the host country offers a standard-from contract to foreign entities, which then signify their assent by investing or otherwise operating in the host country's territory. Consequently, if the terms of the agreement are difficult to enforce, the most obvious response would be to adopt terms that are more easily enforceable. I posit that the reason host countries do not do so is because a stricter tax regime would make it difficult to compete for international investments against countries whose tax systems are easier to manipulate. In other words, the so-called "loopholes" are actually part and parcel of the implicit contractual arrangement between the host country and the MNE.
The neo-Lockean argument is that creation of wealth within a country's borders is effectively a joint project involving the exploitation of the MNE's resources along with the social capital – in the broadest sense of the term – of the host country. Under neo-Lockean theory, the host country is entitled to a share of the income commensurate with its contribution to the production of that wealth, and income tax is the means by which it asserts that right. Profit shifting by MNEs understates the wealth actually created within the host country's territory and prevents the host countr
{"title":"The Right and the Good: Taxing Rights, Value Creation, and the Rhetoric of International Taxation","authors":"David R. Elkins","doi":"10.2139/ssrn.3615648","DOIUrl":"https://doi.org/10.2139/ssrn.3615648","url":null,"abstract":"A prominent theme in the discourse of international taxation is that taxing rights should follow wealth production. Examples of current attempts to implement such a proposition include the OECD’s BEPS project and the frequently heard calls to adopt some form of international formulary apportionment.<br><br>In considering the validity of this proposition, the paper with rely on the familiar dichotomy in moral philosophy between the right and the good. In the context of international taxation, the right involves a host country's deontological claim to receive a portion of the income produced within its borders. The good involves the claim that host countries need revenue from multinational enterprises (MNEs) to fund public goods. Although the literature often conflates these two claims, they are distinct and require separate analysis. <br><br>Within the realm of the right, we must make a further distinction between two different types of right-based claims. On the one hand, a host country may assert that MNEs who choose to operate in its territory take upon themselves an implicit contractual obligation to pay tax as delineated in the host country's laws. When the host country imposes an income tax, MNEs are in effect contractually obligated to pay the host country a percentage of the income generated by their economic activity in the host country. Alternatively, the host country may assert a neo-Lockean claim to a commensurate share of the wealth that its social capital – in the broadest possible sense of the term – helped to create.<br><br>Regarding the contractual claim, I argue that the terms of the contract are in almost all cases delineated by the host country's tax legislation. In effect the host country offers a standard-from contract to foreign entities, which then signify their assent by investing or otherwise operating in the host country's territory. Consequently, if the terms of the agreement are difficult to enforce, the most obvious response would be to adopt terms that are more easily enforceable. I posit that the reason host countries do not do so is because a stricter tax regime would make it difficult to compete for international investments against countries whose tax systems are easier to manipulate. In other words, the so-called \"loopholes\" are actually part and parcel of the implicit contractual arrangement between the host country and the MNE.<br><br>The neo-Lockean argument is that creation of wealth within a country's borders is effectively a joint project involving the exploitation of the MNE's resources along with the social capital – in the broadest sense of the term – of the host country. Under neo-Lockean theory, the host country is entitled to a share of the income commensurate with its contribution to the production of that wealth, and income tax is the means by which it asserts that right. Profit shifting by MNEs understates the wealth actually created within the host country's territory and prevents the host countr","PeriodicalId":119398,"journal":{"name":"Political Economy - Development: Fiscal & Monetary Policy eJournal","volume":"47 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-01-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"134624030","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Aliens in the U.S. are subject to U.S. taxation if they stay long enough to be residents under Internal Revenue Code (I.R.C.) §7701(b)(4). Resident aliens including aliens working and living in the U.S. without status must file and pay tax on their worldwide income and comply with U.S. reporting requirements relating to assets within and outside of the U.S. Form 8843, Statement for Exempt Individuals and Individuals with a Medical Condition (“Form 8843”) allows aliens to exclude some days of presence in the U.S. from the calculation of substantial presence. This article reviews the rules for filing a Form 8843 with the IRS and the outcome of doing so.
{"title":"IRS Form 8843 and Non-U.S. Resident Aliens","authors":"Frank Agostino","doi":"10.2139/ssrn.3538359","DOIUrl":"https://doi.org/10.2139/ssrn.3538359","url":null,"abstract":"Aliens in the U.S. are subject to U.S. taxation if they stay long enough to be residents under Internal Revenue Code (I.R.C.) §7701(b)(4). Resident aliens including aliens working and living in the U.S. without status must file and pay tax on their worldwide income and comply with U.S. reporting requirements relating to assets within and outside of the U.S. Form 8843, Statement for Exempt Individuals and Individuals with a Medical Condition (“Form 8843”) allows aliens to exclude some days of presence in the U.S. from the calculation of substantial presence. This article reviews the rules for filing a Form 8843 with the IRS and the outcome of doing so.","PeriodicalId":119398,"journal":{"name":"Political Economy - Development: Fiscal & Monetary Policy eJournal","volume":"32 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-12-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"129640039","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The literature on the question of how best to distribute the burden of taxation is technical and vast. However, in order for there to be a tax burden to distribute, there must first be a relatively stable social order that establishes, among other things, property rights. But the establishing of property rights is not costless; some revenue must have already been collected. How does one evaluate the distributive implications of a system of revenue collection that is a precondition for distributive questions? The dominant response to this question is to move beyond it by noting that, as a matter of fact, we are no longer in this liminal position and so we can sensibly discuss how best to distribute the tax burden.
In this short chapter I argue for two basic points: First, as to the funding of the set of basic goods that make distributive questions possible, which I call “framework” goods, there is a strong argument that we should relax our demands for use of the “best” tax system. Second, there are likely more scenarios in which this insight about the financing of framework goods applies than one might think. Put simply, if we think a developing country would be well-justified in using a sub-optimal set of taxes to provide framework goods, and I think that we should, then it should also follow that a developed country would be well-justified in using a sub-optimal set of taxes to provide near-framework goods.
{"title":"A Brief Theory of Taxation and Framework Public Goods","authors":"Darien Shanske","doi":"10.2139/ssrn.3826900","DOIUrl":"https://doi.org/10.2139/ssrn.3826900","url":null,"abstract":"The literature on the question of how best to distribute the burden of taxation is technical and vast. However, in order for there to be a tax burden to distribute, there must first be a relatively stable social order that establishes, among other things, property rights. But the establishing of property rights is not costless; some revenue must have already been collected. How does one evaluate the distributive implications of a system of revenue collection that is a precondition for distributive questions? The dominant response to this question is to move beyond it by noting that, as a matter of fact, we are no longer in this liminal position and so we can sensibly discuss how best to distribute the tax burden.<br><br>In this short chapter I argue for two basic points: First, as to the funding of the set of basic goods that make distributive questions possible, which I call “framework” goods, there is a strong argument that we should relax our demands for use of the “best” tax system. Second, there are likely more scenarios in which this insight about the financing of framework goods applies than one might think. Put simply, if we think a developing country would be well-justified in using a sub-optimal set of taxes to provide framework goods, and I think that we should, then it should also follow that a developed country would be well-justified in using a sub-optimal set of taxes to provide near-framework goods.","PeriodicalId":119398,"journal":{"name":"Political Economy - Development: Fiscal & Monetary Policy eJournal","volume":"9 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-12-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"117111738","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Why do some people comply with their obligation to pay taxes while others do not? Scholars of tax behavior, particularly economists and political scientists, have relied on models of state coercion and state reciprocity to answer this question. Neither state coercion nor state reciprocity, however, sufficiently account for individuals who voluntarily comply with their tax obligations to the state. We offer a third explanation, derived from the new sociology of morality and moral psychology, suggesting that two types of moral attitudes (moral imperatives and moral alignment) affect tax compliance. Using a factorial survey experiment of income tax evasion and a survey questionnaire administered to a nationally representative random sample of U.S. adults, we provide a systematic test of the three different models of tax compliance. The results yield strong support for moral attitudes (both moral imperatives and moral alignment) and state coercion, but little support for state reciprocity. We review the implications of our findings in the discussion and conclusion.
{"title":"State Coercion, Moral Attitudes, and Tax Compliance: Evidence from a National Factorial Survey Experiment of Income Tax Evasion","authors":"Blaine G. Robbins, E. Kiser","doi":"10.2139/ssrn.3264020","DOIUrl":"https://doi.org/10.2139/ssrn.3264020","url":null,"abstract":"Why do some people comply with their obligation to pay taxes while others do not? Scholars of tax behavior, particularly economists and political scientists, have relied on models of state coercion and state reciprocity to answer this question. Neither state coercion nor state reciprocity, however, sufficiently account for individuals who voluntarily comply with their tax obligations to the state. We offer a third explanation, derived from the new sociology of morality and moral psychology, suggesting that two types of moral attitudes (moral imperatives and moral alignment) affect tax compliance. Using a factorial survey experiment of income tax evasion and a survey questionnaire administered to a nationally representative random sample of U.S. adults, we provide a systematic test of the three different models of tax compliance. The results yield strong support for moral attitudes (both moral imperatives and moral alignment) and state coercion, but little support for state reciprocity. We review the implications of our findings in the discussion and conclusion.","PeriodicalId":119398,"journal":{"name":"Political Economy - Development: Fiscal & Monetary Policy eJournal","volume":"380 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-12-18","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"133864446","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper uses data that combine retirement distributions reported by taxpayers on tax returns with information reported by the payers of those distributions on information returns. With the combined data we can allocate distributions reported on Form 1040 by the detailed distribution codes reported on Form 1099-R. This allows us to, for example: distinguish nontaxable rollovers from nontaxable Roth distributions or nontaxable basis; and distinguish taxable early distributions from taxable normal distributions, taxable Roth conversions, or taxable distributions related to death or disability. This paper addresses the question of how leakage should be defined when using tax data. Our analysis indicates that penalized distributions, which represent only about half of taxable distributions received by individuals younger than 55, are a reasonable approximation for leakage. For taxpayers younger than 55, unpenalized taxable distributions include payments that are not typically considered to be leakage. These include, for example, DB plan benefits paid to retired military, public safety officers, and other government employees; and distributions made after an employee or IRA owner dies or becomes disabled. The paper also examines retirement distributions more generally, looking across all age groups. We find that receipt of retirement distributions is widespread and the amounts distributed are substantial. Among taxpayers of all ages in 2010, 28 percent received gross distributions — either directly or through a spouse — and 26 percent received non-rollover distributions. Incidence increases dramatically with age, with nearly 60 percent of taxpayers age 59 to 69 and nearly 85 percent of taxpayers age 70 or older receiving non-rollover distributions. Among taxpayers 59 or older with distributions, non-rollover distributions average $20,000 per person. Overall, taxpayers age 59 or older received 80 percent of the dollars distributed through non-rollovers.
{"title":"Decoding Retirement: A Detailed Look at Retirement Distributions Reported on Tax Returns","authors":"Peter J. Brady, S. Bass","doi":"10.2139/ssrn.3529682","DOIUrl":"https://doi.org/10.2139/ssrn.3529682","url":null,"abstract":"This paper uses data that combine retirement distributions reported by taxpayers on tax returns with information reported by the payers of those distributions on information returns. With the combined data we can allocate distributions reported on Form 1040 by the detailed distribution codes reported on Form 1099-R. This allows us to, for example: distinguish nontaxable rollovers from nontaxable Roth distributions or nontaxable basis; and distinguish taxable early distributions from taxable normal distributions, taxable Roth conversions, or taxable distributions related to death or disability. \u0000 \u0000This paper addresses the question of how leakage should be defined when using tax data. Our analysis indicates that penalized distributions, which represent only about half of taxable distributions received by individuals younger than 55, are a reasonable approximation for leakage. For taxpayers younger than 55, unpenalized taxable distributions include payments that are not typically considered to be leakage. These include, for example, DB plan benefits paid to retired military, public safety officers, and other government employees; and distributions made after an employee or IRA owner dies or becomes disabled. \u0000 \u0000The paper also examines retirement distributions more generally, looking across all age groups. We find that receipt of retirement distributions is widespread and the amounts distributed are substantial. Among taxpayers of all ages in 2010, 28 percent received gross distributions — either directly or through a spouse — and 26 percent received non-rollover distributions. Incidence increases dramatically with age, with nearly 60 percent of taxpayers age 59 to 69 and nearly 85 percent of taxpayers age 70 or older receiving non-rollover distributions. Among taxpayers 59 or older with distributions, non-rollover distributions average $20,000 per person. Overall, taxpayers age 59 or older received 80 percent of the dollars distributed through non-rollovers.","PeriodicalId":119398,"journal":{"name":"Political Economy - Development: Fiscal & Monetary Policy eJournal","volume":"41 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-12-13","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"129135434","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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