Bank-Tax Conformity for Corporate Income: An Introduction to the Issues

This paper discusses the issues surrounding the proposals to conform financial accounting income and taxable income. The two incomes diverged in the late 1990s with financial accounting income becoming increasingly greater than taxable income through the year 2000. While the cause of this divergence is not known for certain, many suspect that it is the result of earnings management for financial accounting and/or the tax sheltering of corporate income. Our paper outlines the potential costs and benefits of one of the proposed "fixes" to the divergence: the conforming of the two incomes into one measure. We review relevant research that sheds light on the issues surrounding conformity both in the U.S. as well as evidence from other countries that have more closely aligned book and taxable incomes. The extant empirical literature reveals that it is unlikely that conforming the incomes will reduce the amount of tax sheltering by corporations and that having only one measure of income will result in a loss of information to the capital markets.

“Due Regard” for Commercial Space Must Start with Historic Preservation

Today we rely on the concept of due regard to protect our assets – and heritage – in space. Ensconced in Article IX of the Outer Space Treaty due regard has no legal definition. Nor has its breadth or scope been rigorously tested in court or in any public diplomatic dispute. And so, we blithely promise each other to conduct all activities in space with due regard to the corresponding interests of others. Meaning we pursue our activities with the fervent hope that no one will interfere, whether accidentally or intentionally. This is an untenable state of affairs. It is compounded by the fact that it has recently proven difficult for the international community to agree on space governance matters. This article addresses the concept of due regard as it affects space commerce. Specifically, this article will explore the best way to reach agreement on how spacefaring entities must behave with respect to each other when engaged in activities in space and on other celestial bodies. It is argued that the best path forward is to embrace cultural artifacts and sites in space as objects and areas of universal value, worthy of protection through multilateral agreement. Once the international community agrees on sites that deserve special recognition and protective treatment, that agreement can be adopted as a baseline to establish recognizable norms for meeting the due regard standard imposed by the Outer Space Treaty. To support this argument, the article: discusses the importance of protecting cultural heritage and draws attention to efforts implemented on Earth; provides a review of the international space law regime; and outlines a new approach to the implementation of a governance model for space

Adapting the ISS Code of Conduct to Form the Foundation of Astrolaw

Three decades ago, Dr. J. Henry Glazer, onetime Chief Counsel for NASA Ames, proposed the establishment of a body of astrolaw. “The direct subjects of Space Law are sovereign nations” he observed. The four widely ratified space treaties contain principles and guidelines designed to govern the activities of State. Conversely, the direct subjects of astrolaw would be natural and legal persons in space. In Dr. Glazer’s view, “astrolaw focuses not upon space as a legal regime, but upon space as a place.” Our evolution into a spacefaring species, with single and then multiple human communities off-Earth, is a human necessity. Assuring the sustainability and success of those communities requires the development of guidelines and principles that recognize space as a place, and not a legal regime. We are experiencing a paradigm shift in how activities are conducted in space. Space actors are no longer just governments. And soon, humans in space will not all be government employees or contractors. Elon Musk has promised to send a spacecraft of civilians around the Moon, and more than one company is exploring the establishment of a private space station for use as a hotel. Not only will we have civilian tourists in space, we will have civilian workers to cater to their needs. Addressing on-orbit torts and crimes through the current space treaty regime would lead to jurisdictional absurdities and even diplomatic morass. This Article proposes that the advent and proliferation of space tourism should be the main frame from which we, as a society and global community, consider the regulation of extraterrestrial human civilization. The presentation advocates for the establishment of a Code of Conduct containing principles and guidelines designed to govern the activities and behavior of humans in space. The Code will be loosely modeled on the Code of Conduct for the Space Station Crew developed pursuant to the International Space Station Intergovernmental Agreement. However, rather than the individual remaining the responsibility of his or her national or sponsoring government, the individual shall be responsible for his or her own actions. This Article outlines the substantive terms of the Code of Conduct which, the author proposes should be adopted by national governments and implemented through national regulatory regimes. Establishing a Code of Conduct will lay the foundation for a universal law, astrolaw, in anticipation of the commonality of humans living, working and vacationing in space. It will support and sustain the success of extraterrestrial human communities. It will help prevent unnecessary conflict that may, because of State responsibility for nationals in space, easily rise to diplomatic crisis. And it will thwart the threat of dystopian tyranny on these private pockets of human civilization. Finally, it will assure the safety of the hardy souls that venture into space as private citizens and work responsibly to develop international guidelines that will prevent disasters, without stifling commercial industry, innovation and exploration

A review of tax research

In this paper, we present a review of tax research. We survey four main areas of the literature: (1) the informational role of income tax expense reported for financial accounting, (2) corporate tax avoidance, (3) corporate decision-making including investment, capital structure, and organizational form, and (4) taxes and asset pricing. We summarize the research areas and questions examined to date and what we have learned or not learned from the work completed thus far. In addition, we provide our opinion as to the interesting and important issues for future research

On a generalization of Lie(kk): a CataLAnKe theorem

We define a generalization of the free Lie algebra based on an $n$-ary commutator and call it the free LAnKe. We show that the action of the symmetric group $S_{2n-1}$ on the multilinear component with $2n-1$ generators is given by the representation $S^{2^{n-1}1}$, whose dimension is the $n$th Catalan number. An application involving Specht modules of staircase shape is presented. We also introduce a conjecture that extends the relation between the Whitehouse representation and Lie($k$).Comment: 14 page

Real Effects of Accounting Rules: Evidence from Multinational Firms' Investment Location and Profit Repatriation Decisions

We analyze survey responses from nearly 600 tax executives to better understand corporate decisions about real investment location and profit repatriation. Our evidence indicates that avoiding financial accounting income tax expense is as important as avoiding cash income taxes when corporations decide where to locate operations and whether to repatriate foreign earnings. This result is important in light of the recent research about whether financial accounting affects investment and in light of the decades of research on foreign investment that examines the role of cash income taxes but heretofore has not investigated the importance of financial reporting effects. Our analysis suggests that financial reporting is an important factor to be considered in the policy debates focused on bringing investment to the United States

The effect of repatriation tax costs on U.S. multinational investment

This paper investigates whether the U.S. repatriation tax for U.S. multinational corporations affects foreign investment. Our results show that the locked-out cash due to repatriation tax costs is associated with a higher likelihood of foreign (but not domestic) acquisitions. We also find a negative association between tax-induced foreign cash holdings and the market reaction to foreign deals. This result suggests that the investment activity of firms with high repatriation tax costs is viewed by the market as less value-enhancing than that of firms with low tax costs, consistent with foreign investment of firms with high repatriation tax costs possibly reflecting agency-driven behavior. Keywords: Cash; Investment; Ta

An Empirical Examination of Corporate Tax Noncompliance

This paper offers some exploratory analysis of an extraordinarily rich data set of audit and appeals records, matched with tax returns and financial statements, of several thousand corporations. We find that corporate tax noncompliance, at least as measured by deficiencies proposed upon examination, amounts to approximately 13 percent of “true” tax liability. Second, noncompliance is a progressive phenomenon, meaning that noncompliance as a fraction of a scale measure increases with the size of the company. Other things equal, noncompliance is related to two measures of the presence of intangibles and with being a private company. We find some evidence that incentivized executive compensation schemes are associated with more tax noncompliance, but only with respect to bonuses and not for stock options and other equity-related incentive pay. We uncover no relation between a commonly-studied measure of the quality of corporate governance and the extent of proposed (scaled) tax deficiency. Finally, we find that there is no consistent simple or partial negative association between our measure of tax noncompliance and measures of the effective tax rate calculated from financial statements. These conclusions are preliminary because our central measure of tax noncompliance is the result of an imperfect and perhaps systematically detailed audit of a tax return declaration that may itself be the opening bid in what is expected, often correctly, to be an intense negotiation and formal appeals process. Second, the causal links among tax aggressiveness, executive compensation, and corporate governance are potentially complex, and the analysis presented here at best establishes statistical associations, but certainly does not establish causal relations.http://deepblue.lib.umich.edu/bitstream/2027.42/39146/1/1025.pd