Minimum taxes (including global minimum taxes) have serious drawbacks, and generally make sense, if at all, only if otherwise superior options must be ruled out for reasons of optics or political economy. Yet, given the “compared to what?” question that haunts all real-world tax policy-making, one cannot reasonably say that they should never be used. Still, any such use should generally be contingent, reluctant, and based on understanding their structural deficiencies.
{"title":"What Are Minimum Taxes, and Why Might One Favor or Disfavor Them?","authors":"Daniel N. Shaviro","doi":"10.2139/SSRN.3604328","DOIUrl":"https://doi.org/10.2139/SSRN.3604328","url":null,"abstract":"Minimum taxes (including global minimum taxes) have serious drawbacks, and generally make sense, if at all, only if otherwise superior options must be ruled out for reasons of optics or political economy. Yet, given the “compared to what?” question that haunts all real-world tax policy-making, one cannot reasonably say that they should never be used. Still, any such use should generally be contingent, reluctant, and based on understanding their structural deficiencies.","PeriodicalId":330166,"journal":{"name":"Law & Society: Public Law - Tax eJournal","volume":"35 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-06-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"134242171","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 : 2020-04-13DOI: 10.5195/taxreview.2019.107
J. Milne
Debates about carbon taxes in political and policy circles inevitably involve discussions about how to use the revenue from carbon taxes. Choices about revenue use will turn on the complex interaction of political strategies, the broader fiscal picture, equity and economic concerns, and environmental considerations. The ultimate choice will mold policymakers’ promises to constituents and the public as they describe and promote carbon taxes. Those promises become particularly important when they purport to dedicate the revenue to a specific purpose. Voters and stakeholders will wonder whether promises can and will be kept. Can the revenue actually be put into a secure lockbox to ensure that the revenue is used as promised? Will that lockbox endure over time?
This article considers the legal durability of promises to earmark carbon tax revenue. It focuses on three types of revenue dedication: revenue-neutral tax reform, revenue recycling through “dividends” or rebates, and dedication of revenue to spending on climate-related matters. It explores the legal design of these alternatives. It also analyzes how the legal context, such as budget rules and procedures, may influence whether promises are kept in the short and long terms. While drawing on examples of carbon pricing measures and proposals in North America, the article strives to identify issues that may apply in other countries as well. Regardless of jurisdiction, policymakers and carbon tax advocates should consider whether their rhetorical promises can translate into legally durable reality. The article does not advocate for specific policy or political choices about how to use carbon tax revenue. It seeks instead to help inform choices and future research.
{"title":"How Durable is a Lockbox for Carbon Tax Revenue?","authors":"J. Milne","doi":"10.5195/taxreview.2019.107","DOIUrl":"https://doi.org/10.5195/taxreview.2019.107","url":null,"abstract":"Debates about carbon taxes in political and policy circles inevitably involve discussions about how to use the revenue from carbon taxes. Choices about revenue use will turn on the complex interaction of political strategies, the broader fiscal picture, equity and economic concerns, and environmental considerations. The ultimate choice will mold policymakers’ promises to constituents and the public as they describe and promote carbon taxes. Those promises become particularly important when they purport to dedicate the revenue to a specific purpose. Voters and stakeholders will wonder whether promises can and will be kept. Can the revenue actually be put into a secure lockbox to ensure that the revenue is used as promised? Will that lockbox endure over time? <br><br>This article considers the legal durability of promises to earmark carbon tax revenue. It focuses on three types of revenue dedication: revenue-neutral tax reform, revenue recycling through “dividends” or rebates, and dedication of revenue to spending on climate-related matters. It explores the legal design of these alternatives. It also analyzes how the legal context, such as budget rules and procedures, may influence whether promises are kept in the short and long terms. While drawing on examples of carbon pricing measures and proposals in North America, the article strives to identify issues that may apply in other countries as well. Regardless of jurisdiction, policymakers and carbon tax advocates should consider whether their rhetorical promises can translate into legally durable reality. The article does not advocate for specific policy or political choices about how to use carbon tax revenue. It seeks instead to help inform choices and future research.","PeriodicalId":330166,"journal":{"name":"Law & Society: Public Law - Tax eJournal","volume":"4 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-04-13","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"130771047","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}
Despite the economic importance of small and medium enterprises (SMEs), little is known about their tax compliance perceptions, which may influence their compliance behavior. This is particularly so in relation to comparing the tax perceptions of New Zealand SMEs and their tax practitioners. This article reports on a qualitative study which examined the tax compliance perceptions of New Zealand SMEs and their tax practitioners. The findings of this study reveal that SMEs’ perceptions of tax compliance are multifaceted and include legal factors, compliance costs, economic considerations and perceptions of “others”. On the other hand, tax practitioners generally have a narrow context focusing mainly on compliance cost and legal obligations. The tax policy implications from this study include that it can potentially assist tax authorities to design and implement strategies to influence SMEs’ compliance behaviors. Also, for tax practitioners it illustrates their important role in reducing the stress of their SME clients by assisting them through education, including how to use accounting reports for compliance and business control purposes.
{"title":"Perceptions of Tax Compliance by SMEs and Tax Practitioners in New Zealand: A Divergent View?","authors":"Dr. Sue Yong, B. Freudenberg","doi":"10.2139/ssrn.3649856","DOIUrl":"https://doi.org/10.2139/ssrn.3649856","url":null,"abstract":"Despite the economic importance of small and medium enterprises (SMEs), little is known about their tax compliance perceptions, which may influence their compliance behavior. This is particularly so in relation to comparing the tax perceptions of New Zealand SMEs and their tax practitioners. This article reports on a qualitative study which examined the tax compliance perceptions of New Zealand SMEs and their tax practitioners. The findings of this study reveal that SMEs’ perceptions of tax compliance are multifaceted and include legal factors, compliance costs, economic considerations and perceptions of “others”. On the other hand, tax practitioners generally have a narrow context focusing mainly on compliance cost and legal obligations. The tax policy implications from this study include that it can potentially assist tax authorities to design and implement strategies to influence SMEs’ compliance behaviors. Also, for tax practitioners it illustrates their important role in reducing the stress of their SME clients by assisting them through education, including how to use accounting reports for compliance and business control purposes.","PeriodicalId":330166,"journal":{"name":"Law & Society: Public Law - Tax eJournal","volume":"14 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-03-13","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"129110288","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 IRS faces the monumental task of verifying, to the extent possible, the tax consequences reported on the hundreds of millions of tax returns filed each year. It does so with meager and shrinking resources. Some taxpayers burden the filing system more than others. At one extreme, a taxpayer who earns only income that is subject to third-party reporting and withholding and who claims the standard deduction adds very little to the IRS’s burden. At the other end of the extreme, a large business engaged in numerous complex transactions the tax treatment of which are not free from doubt demands significant resources if that taxpayer’s claimed tax outcomes are fully examined. In light of this landscape, this Article makes the novel proposal that Congress require payment of a tax return filing fee by some taxpayers. The amount of the fee would vary based on some of the factors that make each taxpayer more or less difficult to audit, with carve-outs for difficult-to-audit items that are disproportionately claimed by lower-income individuals. The goals of the proposal are three: first, to make the system fairer, second, to raise additional revenue, and third, to improve efficiency by encouraging taxpayers to take into account the costs imposed on the tax administration system by their complex transactions.
{"title":"Time for a Tax Return Filing Fee","authors":"Emily L. Cauble","doi":"10.2139/ssrn.3552675","DOIUrl":"https://doi.org/10.2139/ssrn.3552675","url":null,"abstract":"The IRS faces the monumental task of verifying, to the extent possible, the tax consequences reported on the hundreds of millions of tax returns filed each year. It does so with meager and shrinking resources. Some taxpayers burden the filing system more than others. At one extreme, a taxpayer who earns only income that is subject to third-party reporting and withholding and who claims the standard deduction adds very little to the IRS’s burden. At the other end of the extreme, a large business engaged in numerous complex transactions the tax treatment of which are not free from doubt demands significant resources if that taxpayer’s claimed tax outcomes are fully examined. In light of this landscape, this Article makes the novel proposal that Congress require payment of a tax return filing fee by some taxpayers. The amount of the fee would vary based on some of the factors that make each taxpayer more or less difficult to audit, with carve-outs for difficult-to-audit items that are disproportionately claimed by lower-income individuals. \u0000 \u0000The goals of the proposal are three: first, to make the system fairer, second, to raise additional revenue, and third, to improve efficiency by encouraging taxpayers to take into account the costs imposed on the tax administration system by their complex transactions.","PeriodicalId":330166,"journal":{"name":"Law & Society: Public Law - Tax eJournal","volume":"46 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-03-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"117171737","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}
Has income tax become voluntary in Australia? It appears that for some, nil or very low tax bills are a very real prospect. Those with flexibility over how they earn income can use a range of legal means of ‘tax arbitrage’ to pay a lower marginal tax rate. Those highly motivated to achieve the lowest possible tax bill can structure their financial affairs so as to stream income through a mix of companies, trusts, property assets, superannuation funds and adult family members over time. This paper presents some of the simpler strategies that are part of the ‘Tax Planning Playbook’. In doing so, it shows how tax planning is available to people across the income distribution. It is not surprising that taxpayers make use of the opportunities available to them and respond to the incentives they face. However, a system that encourages tax planning is an affront to the commonly-held core principles of good tax design of fairness, efficiency and simplicity. It also raises questions about the longer-term sustainability of Australia’s tax system. Addressing tax planning requires a wholesale rethink about the design and role of income in Australia’s tax system.
{"title":"The Australian Tax Planning Playbook: Volume 1","authors":"Robert V. Breunig, T. Sainsbury","doi":"10.2139/ssrn.3553095","DOIUrl":"https://doi.org/10.2139/ssrn.3553095","url":null,"abstract":"Has income tax become voluntary in Australia? It appears that for some, nil or very low tax bills are a very real prospect. Those with flexibility over how they earn income can use a range of legal means of ‘tax arbitrage’ to pay a lower marginal tax rate. Those highly motivated to achieve the lowest possible tax bill can structure their financial affairs so as to stream income through a mix of companies, trusts, property assets, superannuation funds and adult family members over time. This paper presents some of the simpler strategies that are part of the ‘Tax Planning Playbook’. In doing so, it shows how tax planning is available to people across the income distribution. It is not surprising that taxpayers make use of the opportunities available to them and respond to the incentives they face. However, a system that encourages tax planning is an affront to the commonly-held core principles of good tax design of fairness, efficiency and simplicity. It also raises questions about the longer-term sustainability of Australia’s tax system. Addressing tax planning requires a wholesale rethink about the design and role of income in Australia’s tax system.","PeriodicalId":330166,"journal":{"name":"Law & Society: Public Law - Tax eJournal","volume":"43 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"121035040","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 Article examines corporate tax trends in the context of the pressing global issue of climate change. Multinational corporations play a huge role in the global economy. We argue that the role of for-profit corporations should not be limited to making short-term profits for their shareholders. If corporations benefit from corporate tax reductions, some of that benefit should be shared with society. This Article explores the connection between climate change and corporate activity through a new lens: corporate tax policy. It expands the current inquiry about the impact of taxes on corporations by connecting that discussion to the impact of multinational corporate activity on the global environment. To date, while research has been done on the interaction between corporate tax avoidance and corporate social responsibility, no research has examined the connection between the global trend of corporate tax rate cuts and the increasingly important influence of corporate environmental social responsibility. This Article begins to fill that gap by making a qualitative inquiry into the interaction between effective corporate tax rates, corporate tax cuts, and corporate social responsibility.
{"title":"Saving the Planet by Cutting Corporate Taxes: A Comparative Case Study Analysis","authors":"Roberta F. Mann, Fiona Martin, B. Butcher","doi":"10.5744/ftr.2020.1004","DOIUrl":"https://doi.org/10.5744/ftr.2020.1004","url":null,"abstract":"This Article examines corporate tax trends in the context of the pressing global issue of climate change. Multinational corporations play a huge role in the global economy. We argue that the role of for-profit corporations should not be limited to making short-term profits for their shareholders. If corporations benefit from corporate tax reductions, some of that benefit should be shared with society. This Article explores the connection between climate change and corporate activity through a new lens: corporate tax policy. It expands the current inquiry about the impact of taxes on corporations by connecting that discussion to the impact of multinational corporate activity on the global environment. To date, while research has been done on the interaction between corporate tax avoidance and corporate social responsibility, no research has examined the connection between the global trend of corporate tax rate cuts and the increasingly important influence of corporate environmental social responsibility. This Article begins to fill that gap by making a qualitative inquiry into the interaction between effective corporate tax rates, corporate tax cuts, and corporate social responsibility.","PeriodicalId":330166,"journal":{"name":"Law & Society: Public Law - Tax eJournal","volume":"41 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-02-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"121595347","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}
In the first part of the paper, it is argued that multinational enterprises (MNEs) may benefit from including considerations of corporate responsibility when determining their tax planning behavior. The conclusion mainly rests on the fact that increased awareness of responsible tax behavior may shed useful light on the damaging effects aggressive tax planning may have on an MNE’s reputation. In addition, an increased focus on responsible tax behavior may assist the MNE’s management in maximizing shareholder welfare - and not only shareholder value. Against this background, the second part of the paper is devoted to an analysis of how MNEs actually can implement and design their own tax policy/strategy in responsible manner. Finally, in the third part of the paper, the author tries to take stock of the current endeavors of Danish-based MNEs with respect to implementation of responsible tax policies. In this context, and based on a review of publicly available information gathered from MNEs forming part of the OMX Copenhagen 25 Index, it is concluded that the largest Danish-based MNEs currently show solid appetite for implementing policies on responsible tax and that some of these policies actually make up good examples of how to design public tax policies/strategies.
{"title":"Responsible Tax in Multinational Enterprises – Why and How? (Ansvarlig Skat I Multinationale Koncerner – Hvorfor Og Hvordan?)","authors":"Peter Koerver Schmidt","doi":"10.2139/ssrn.3545410","DOIUrl":"https://doi.org/10.2139/ssrn.3545410","url":null,"abstract":"In the first part of the paper, it is argued that multinational enterprises (MNEs) may benefit from including considerations of corporate responsibility when determining their tax planning behavior. The conclusion mainly rests on the fact that increased awareness of responsible tax behavior may shed useful light on the damaging effects aggressive tax planning may have on an MNE’s reputation. In addition, an increased focus on responsible tax behavior may assist the MNE’s management in maximizing shareholder welfare - and not only shareholder value. Against this background, the second part of the paper is devoted to an analysis of how MNEs actually can implement and design their own tax policy/strategy in responsible manner. Finally, in the third part of the paper, the author tries to take stock of the current endeavors of Danish-based MNEs with respect to implementation of responsible tax policies. In this context, and based on a review of publicly available information gathered from MNEs forming part of the OMX Copenhagen 25 Index, it is concluded that the largest Danish-based MNEs currently show solid appetite for implementing policies on responsible tax and that some of these policies actually make up good examples of how to design public tax policies/strategies.","PeriodicalId":330166,"journal":{"name":"Law & Society: Public Law - Tax eJournal","volume":"77 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-02-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"126225692","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}
Most legal and economics scholars recognize both that the government needs information about taxpayers’ transactions in order to determine whether their reporting is honest, and that third-party reporting helps the government obtain that information. Given governments’ reliance on tax funds, it is risky to think that information or third-party reporting is not needed by tax agencies. However, a recent article by Professor Wei Cui asserts that “modern governments can practice ‘taxation without information.’” Professor Cui’s argument rests on two premises: (1) “giving governments effective access to taxpayer information through third parties does not explain the success of modern tax administration” because, he argues, some important taxes, such as the value added tax (VAT), do not involve information reporting; and (2) modern tax administration succeeds because business firms are “sites of social cooperation under the rule of law,” fostering compliance. As this Article explains, the literature demonstrates that both arguments are mistaken. That is, it shows that third-party information reporting is highly effective, information sharing is used to enforce VATs, and firms are not inherently compliant. In fact, where individuals report on firms, firms’ compliance increases, which supports the intuitive notion that third-party reporting increases tax compliance and that information accordingly matters in tax enforcement.
{"title":"Information Matters in Tax Enforcement","authors":"Leandra Lederman, J. Dugan","doi":"10.2139/SSRN.3325598","DOIUrl":"https://doi.org/10.2139/SSRN.3325598","url":null,"abstract":"Most legal and economics scholars recognize both that the government needs information about taxpayers’ transactions in order to determine whether their reporting is honest, and that third-party reporting helps the government obtain that information. Given governments’ reliance on tax funds, it is risky to think that information or third-party reporting is not needed by tax agencies. However, a recent article by Professor Wei Cui asserts that “modern governments can practice ‘taxation without information.’” Professor Cui’s argument rests on two premises: (1) “giving governments effective access to taxpayer information through third parties does not explain the success of modern tax administration” because, he argues, some important taxes, such as the value added tax (VAT), do not involve information reporting; and (2) modern tax administration succeeds because business firms are “sites of social cooperation under the rule of law,” fostering compliance. As this Article explains, the literature demonstrates that both arguments are mistaken. That is, it shows that third-party information reporting is highly effective, information sharing is used to enforce VATs, and firms are not inherently compliant. In fact, where individuals report on firms, firms’ compliance increases, which supports the intuitive notion that third-party reporting increases tax compliance and that information accordingly matters in tax enforcement.","PeriodicalId":330166,"journal":{"name":"Law & Society: Public Law - Tax eJournal","volume":"12 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-12-21","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"125254081","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}
Only the abstract, table of contents and introduction are available here. As the OECD and the G20 strengthen their central role in the international tax policy arena, scholars and commentators increasingly question their legitimacy to impose standards and norms worldwide. Calls for greater participation of developing countries led the OECD to introduce the Inclusive Framework. Despite questions about whether such initiative improved normative legitimacy or constituted mere rhetoric to circumvent calls for greater inclusiveness, it illustrates the attention given by policy leaders to the potential legitimacy deficits in the international tax regime. This article analyses the present international tax regime from the perspective of normative legitimacy and argues that despite the importance of improving participation of less powerful countries in international tax policy decisions, increased participation alone may not suffice in making these decisions responsive to interests and needs of developing countries. Structural shortcomings in the institutional design of the international tax regime may require a more in-depth discussion on what normative principles should guide overall reform of the international tax system in a way that produces a fairer allocation of rights and duties among different stakeholders.
{"title":"Institutional and Structural Legitimacy Deficits in the International Tax Regime","authors":"Ivan Ozai","doi":"10.2139/SSRN.3545569","DOIUrl":"https://doi.org/10.2139/SSRN.3545569","url":null,"abstract":"Only the abstract, table of contents and introduction are available here. \u0000 \u0000As the OECD and the G20 strengthen their central role in the international tax policy arena, scholars and commentators increasingly question their legitimacy to impose standards and norms worldwide. Calls for greater participation of developing countries led the OECD to introduce the Inclusive Framework. Despite questions about whether such initiative improved normative legitimacy or constituted mere rhetoric to circumvent calls for greater inclusiveness, it illustrates the attention given by policy leaders to the potential legitimacy deficits in the international tax regime. \u0000 \u0000This article analyses the present international tax regime from the perspective of normative legitimacy and argues that despite the importance of improving participation of less powerful countries in international tax policy decisions, increased participation alone may not suffice in making these decisions responsive to interests and needs of developing countries. Structural shortcomings in the institutional design of the international tax regime may require a more in-depth discussion on what normative principles should guide overall reform of the international tax system in a way that produces a fairer allocation of rights and duties among different stakeholders.","PeriodicalId":330166,"journal":{"name":"Law & Society: Public Law - Tax eJournal","volume":"441 ","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-12-18","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"120876721","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}
Economists have long noted that the tax exclusion of employer-sponsored insurance (ESI) caused workers to purchase health plans that differ in price and other characteristics from those they would otherwise choose for themselves. We explore the short-term and long-term benefits of giving workers better control over ESI funds. To measure near-term benefits, we execute a simulation in which employees in large group plans capitalize on a new opportunity to use tax-advantaged Health Reimbursement Arrangements (HRAs) to control the full ESI contribution. Employees would deduct for income tax purposes the amount used for health insurance and, if they spend less than the amount of their ESI funds, take the remainder as taxed income. Our calculations adjust for adverse selection by providing a cross-subsidization holdback from the ESI funds. We find that employees increase annual after-tax household income between $101–$252 billion and that federal income tax revenues would increase by $39–$163 billion. Lower- and middle-income households gain proportionately more income. Long-term benefits include the increased take-up of new policies that reduce net spending, spillover benefits to governmental health care programs, and innovative educational and navigational services. We compares these results to those in nations with similar consumer–driven health care systems. The U.S. results rest on offering workers HRAs newly integrated with health plans, adequate plan choice, and transparency about plan actuarial values and ESI contributions. Our policy recommendations include expanded transparency in Box 12 of IRS Form W-2, currently the only required source of employee information about their ESI.
{"title":"Thinking Outside the Box (12): The Benefits of Increased Transparency in Employer-Sponsored Health Insurance for the 180 Million Insured","authors":"R. Herzlinger, Barak D Richman","doi":"10.2139/ssrn.3498366","DOIUrl":"https://doi.org/10.2139/ssrn.3498366","url":null,"abstract":"Economists have long noted that the tax exclusion of employer-sponsored insurance (ESI) caused workers to purchase health plans that differ in price and other characteristics from those they would otherwise choose for themselves. We explore the short-term and long-term benefits of giving workers better control over ESI funds. \u0000 \u0000To measure near-term benefits, we execute a simulation in which employees in large group plans capitalize on a new opportunity to use tax-advantaged Health Reimbursement Arrangements (HRAs) to control the full ESI contribution. Employees would deduct for income tax purposes the amount used for health insurance and, if they spend less than the amount of their ESI funds, take the remainder as taxed income. Our calculations adjust for adverse selection by providing a cross-subsidization holdback from the ESI funds. We find that employees increase annual after-tax household income between $101–$252 billion and that federal income tax revenues would increase by $39–$163 billion. Lower- and middle-income households gain proportionately more income. Long-term benefits include the increased take-up of new policies that reduce net spending, spillover benefits to governmental health care programs, and innovative educational and navigational services. We compares these results to those in nations with similar consumer–driven health care systems. \u0000 \u0000The U.S. results rest on offering workers HRAs newly integrated with health plans, adequate plan choice, and transparency about plan actuarial values and ESI contributions. Our policy recommendations include expanded transparency in Box 12 of IRS Form W-2, currently the only required source of employee information about their ESI.","PeriodicalId":330166,"journal":{"name":"Law & Society: Public Law - Tax eJournal","volume":"45 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-12-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"122681600","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}
京公网安备 11010802042870号
京ICP备2023020795号-1
扫码关注我们
求助内容：
应助结果提醒方式：