The Hidden Limits of the Charitable Deduction: An Introduction to Hypersalience

Behavioral economics introduced the concept of salience to law and economics. In the area of tax policy, salience refers to the prominence of taxes in the minds of taxpayers. This article complicates the literature on salience and taxation by introducing the concept of “hypersalience,” which is in many ways the mirror image of hidden taxation. While a revenue-raising tax provision must be hidden for taxpayers to underestimate their tax bill, a revenue-reducing tax provision – such as a deduction, exclusion, or credit – must be more than fully salient for taxpayers to underestimate their tax bill. In other words, the provision itself must be salient, but the limits of that provision must be hidden, or low-salience. This article uses the charitable deduction to illustrate the concept of hypersalience. While the charitable deduction is extremely salient to many taxpayers, not all taxpayers who believe that they will benefit from the deduction are correct. In fact, even though many Americans are aware that donations are tax-deductible, fewer than 50% of taxpayers can take advantage of the charitable deduction. The concept of hypersalience is important for several reasons. First, it highlights the role of non-governmental actors in fostering taxpayer ignorance about the tax system. This article suggests that the hypersalience of the charitable deduction is at least partly due to marketing efforts by private third-party beneficiaries. Second, it complicates economic models, such as those of price elasticity of giving, and suggests that certain tax provisions may be more treasury efficient than previously thought. Third, it may lead to increased consumption of certain goods. This article concludes that, although hypersalience may mean that the government is able to induce greater behavioral distortions without losing revenue, the costs of this phenomenon outweigh its benefits. Because hypersalience is due to taxpayer misunderstanding and the actions of third-party beneficiaries acting in their own interest, this article proposes several possible avenues for curtailing this phenomenon

The hybrid financial instruments : the effects of the OECD BEPS Action 2 report and the ATAD

This contribution critically assesses the complex hybrid mismatch rule concerning financial instruments as developed under the OECD BEPS action 2-proposal and subsequently implemented in the Anti-Tax Avoidance Directive (ATAD). Both approaches are compared, starting with a profound analysis of the OECD initiative. Given their obligation to implement the European initiative in domestic tax law by 1 January 2020, domestic legislators now have to deal with the exact meaning of the Directive. However, the ambiguous text incites uncertainties and will definitely raise incoherencies between the several EU-Member States. Both international initiatives clearly rather aim to counter tax avoidance, instead of creating coherencies: only double non-taxation is envisaged and the taxpayer is confronted with a rather technical, hierarchical set of rules increasing his tax burden, because of an objective incoherent outcome. The solution is hardly inspired by the fundamental idea of BEPS to tax income where it has been generated. Given this rather mechanical approach the question is finally raised whether restrictions on the freedom of establishment and the free movement of capital can be justified. However, as this article focuses on the task for domestic legislators, this ultimate question has not been substantially investigated

The nature of representation in Feynman diagrams

After a brief presentation of Feynman diagrams, we criticizise the idea that Feynman diagrams can be considered to be pictures or depictions of actual physical processes. We then show that the best interpretation of the role they play in quantum field theory and quantum electrodynamics is captured by Hughes' Denotation, Deduction and Interpretation theory of models (DDI), where models are to be interpreted as inferential, non-representational devices constructed in given social contexts by the community of physicists

Philanthropy and the Renewal of Democracy: Is it Time to Step Up Our Game?

When Philanthropy Northwest and the Kettering Foundation published the first edition of this booklet in April 2014, the wounds and diseases afflicting our body politic were already causing concern among growing numbers of citizens, including many philanthropists. Our question about whether we in philanthropy should be stepping up our game in our efforts to strengthen democratic institutions and practices was already being answered in the affirmative by a growing number of philanthropists. That response has intensified as the challenges facing democracy have multiplied in the intervening months. As more of Philanthropy Northwest's members ask how they can contribute to strengthening democracy, we have responded by creating a discussion platform called "Democracy Northwest" and, in cooperation with the Kettering Foundation, revising and updating this monograph.In the Fall 2016 edition of this monograph, Daniel Kemmis explores the sometimes-fraught relationship between philanthropy and democracy. Beginning with a wide-ranging stroll through the shared history of philanthropy and democracy, Kemmis examines the current post-Citizens United landscape and asks whether philanthropy can and should do more to strengthen the infrastructure and practices of democracy.The 2016 edition features new graphics and other updates reflecting changes in philanthropy and democracy since 2014, as well as a new foreword by Remy Trupin, Philanthropy Northwest's Advocacy Catalyst Fellow