A Policy Analysis of Michigan\u27s Mislabeled Gross Receipts Tax

On January 1, 2008, the State of Michigan implemented a new tax, labeled a modified gross receipts tax (MGRT). The label is misleading. The tax is not on gross receipts but rather on gross receipts reduced by purchases from other firms, defined generally to include inventory purchased during the taxable year, capital purchases, and material and supplies. In some respects, the tax resembles a value-added tax (VAT), although it has some important features not found in a traditional VAT or in any known variation of that tax. The purpose of the MGRT, other than to raise revenue, is unclear on its face and is not clarified by the legislative history, which is virtually nonexistent. In this article, we undertake to describe this new tax, classify it as best we can within the tax taxonomy, and speculate about its effects on Michigan taxpayers and on the Michigan economy. Section I, by way of introduction, summarizes the tax reform efforts that led to the adoption of the gross receipts tax. Section II discusses the problems of classifying the tax, comparing it to a traditional gross receipts tax and to a tax on value added. Section III begins with an overview of the salient features of the MGRT and then discusses in greater detail three important features of the tax, namely its nexus rules, its apportionment rules, and its unitary business rules. We speculate about the impact of the tax on Michigan and Michigan taxpayers in the conclusion

When are fish sources versus sinks of nutrients in lake ecosystems?

Animals can be important in nutrient cycling through a variety of direct and indirect pathways. A high biomass of animals often represents a large pool of nutrients, leading some ecologists to argue that animal assemblages can represent nutrient sinks within ecosystems. The role of animals as sources vs. sinks of nutrients has been debated particularly extensively for freshwater fishes. We argue that a large pool size does not equate to a nutrient sink; rather, animals can be nutrient sinks when their biomass increases, when emigration rates are high, and/or when nutrients in animal carcasses are not remineralized. To further explore these ideas, we use a simple model to evaluate the conditions under which fish are phosphorus (P) sources or sinks at the ecosystem (lake) level, and at the habitat level (benthic and water column habitats). Our simulations suggest that, under most conditions, fish are sinks for benthic P but are net P sources to the water column. However, P source and sink strengths depend on fish feeding habits (proportion of P consumed from the benthos and water column), migration patterns, and especially the fate of carcass P. Of particular importance is the rate at which carcasses are mineralized and the relative importance of benthic vs. pelagic primary producers in taking up mineralized P (and excreted P). Higher proportional uptake of P by benthic primary producers increases the likelihood that fish are sinks for water column P. Carcass bones and scales are relatively recalcitrant and can represent a P sink even if fish biomass does not change over time. Thus, there is a need for better documentation of the fraction of carcass P that is remineralized, and the fate of this P, under natural conditions. We urge a more holistic perspective regarding the role of animals in nutrient cycling, with a focus on quantifying the rates at which animals consume, store, release, and transport nutrients under various conditions

Designing a Combined Reporting Regime for a State Corporate Income Tax: A Case Study of Louisiana

This article presents a plan for revitalizing the Louisiana corporate income tax through the adoption of a combined reporting regime. Our plan would require affiliated companies engaged in a unitary business in the State to pay their Louisiana income tax based on an apportioned share of their combined income. Combined reporting is the only effective way for any state to impose a fair and uniform corporation income tax on multistate and multinational enterprises and to gain or maintain control over its own tax base. The current Louisiana corporate income tax is subject to abuse through tax planning techniques that are very familiar to members of the tax-avoidance community. California and other states that have adopted combined reporting have demonstrated that combined reporting fairly and effectively responds to most of these common tax avoidance techniques. Part II, below, discusses the potential benefits inuring to Louisiana from adopting a combined reporting regime. Those benefits are not mere speculation. California has been operating a combined reporting system successfully for nearly seven decades. In brief, the benefits are a uniform treatment of corporate groups without regard for differences in their organizational structure, a strong bulwark against the use of tax-haven jurisdictions to avoid state taxation, a significant reduction in administrative burdens on the tax department and on complying taxpayers, and the removal of the competitive disadvantage currently imposed on local firms that are unable to engage in cross-border tax-avoidance. In Part III, we address some basic issues in the design of an effective combined reporting regime. One of the important features of combined reporting is the use of a formula to apportion the unitary business income of a unitary enterprise between Louisiana and the rest of the relevant universe. Louisiana already uses formulary apportionment in its current corporate tax system. To operate a combined reporting regime, however, Louisiana must apply that formula not to the separate income of each corporation but to the combined income of a corporate group engaged in a unitary business in Louisiana. Yielding to political realities, we recommend that Louisiana offer companies a water?s edge election that would allow them to exclude from their combined report the income derived by certain foreign affiliates that do not have an obvious close tie to the unitary business conducted in Louisiana. Part IV addresses a variety of technical issues that Louisiana should address when adopting a combined reporting regime. We offer our views on how those issues should be resolved, drawing, when appropriate, on the experience of other combined-reporting states. Some of these issues relate to potential transition problems. Other issues relate to practical problems of assessing and collecting a tax from corporations operating in Louisiana on income that is computed by reference to the combined income of a unitary group

Student experiences of virtual reality - a case study in learning special relativity

We present a study of student learning through the use of virtual reality. A software package is used to introduce concepts of special relativity to students in a game-like environment where users experience the effects of travelling at near light speeds. From this new perspective, space and time are significantly different to that experienced in everyday life. The study explores how students have worked with this environment and how these students have used this experience in their study of special relativity. A mixed method approach has been taken to evaluate the outcomes of separate implementations of the package at two universities. Students found the simulation to be a positive learning experience and described the subject area as being less abstract after its use. Also, students were more capable of correctly answering concept questions relating to special relativity, and a small but measurable improvement was observed in the final exam