Accelerating Depreciation in Recession

What would you do if on January 13, 2016, you had won the $1.5 billion Powerball jackpot? The prize gives you the choice of a smaller lump sum now or the full jackpot parceled out for years to come. For the New York Times and numerous financial experts, the right choice is clear: take the money over time. While lump sums are nice, they are not worth a big discount when compared to “ultrasafe” income streams (like the Powerball annuity), especially in an “ultralow interest rate environment.” What everyone understands about Powerball seems to elude us when it comes to the United States’ largest corporate tax expenditure. “Accelerated depreciation” rules give taxpayers a lump sum deduction now, rather than the gradual deductions they would normally claim. Called tax law’s “standard method for combating recessions,” accelerated depreciation has become the most important tax policy affecting businesses because it is thought to be an effective if costly way to stimulate the economy, particularly during tough economic times. I argue, to the contrary, that accelerated depreciation debates ignore the lessons of Powerball. Like lottery payments, gradual depreciation deductions are highly certain, making them far more valuable than has been assumed. As a result, replacing them with accelerated depreciation is far less valuable than has been assumed. Further, the benefits of accelerated depreciation plummet during and following recession—precisely when these policies tend to be expanded. I illustrate these points with a numerical example exposing when real firms paid extra taxes (and the government collected extra revenue) as a result of the government’s purported stimulus program

Noncompetes as Tax Evasion

Al Capone famously boasted of his criminal empire: “Some call it bootlegging. Some call it racketeering. I call it a business.” Treasury Agent Frank Wilson and Prosecutor George Johnson put Capone behind bars not by disputing his characterization and pursuing murder or assault or RICO charges, but by accepting it and enforcing its tax implications. Irrespective of their legality, Capone’s businesses were profitable, and Capone had not reported their profits for tax purposes. A simple application of bedrock tax law achieved what other legal routes failed to achieve and sent Capone to Alcatraz. The trick was to see the tax argument. Policymakers should use a similar approach to curtail the excessive, exploitative, and anticompetitive use of employment noncompete agreements. Currently, nearly one in five (or thirty million) American workers is bound by an employment noncompete. Employers claim that they adequately compensate employees for noncompete restrictions with higher wages, bigger raises, and/or more generous bonuses. Policymakers scoff at this claim and use contract law to attack them. Unfortunately, employment noncompetes are like Al Capone in that they have flourished despite the law’s efforts to restrain them. Recently, the largest study of noncompetes in U.S. history paradoxically found that their prevalence is unaffected by their enforceability. In states like California that refuse to enforce employment noncompetes, they are as common as in states that uphold them. Contract law has proved ill-equipped to respond to the pervasive, expanding, and damaging use of noncompetes. This Article is the first to shift the focus and to argue that employment noncompetes, as employers currently use them, constitute tax evasion and should be attacked as such. If employers pay employees for noncompetes through compensation, then by employers’ own account, this compensation is not purely an expense associated with immediate benefits; rather, it is an expenditure associated with future benefits—benefits that the employer will enjoy years after payment. Thus, the IRS should stop allowing employers to fully immediately deduct the compensation they pay to employees subject to noncompetes and instead should require that an adequate portion of total compensation be allocated to the noncompete and amortized over the restricted period, beginning when employment ends

Government as Investor: The Case of Immediate Expensing

For more than sixty years, tax scholars have recognized conditions under which the government ceases to be a mere taxing entity—imposing a rate of tax on a business’s profits—and through the operation of tax law becomes more like an investment partner—contributing its fair share of capital to new investments and proportionately sharing in losses as well as gains. These conditions, which are satisfied by immediate expensing policies, are now common. The investment partner analogy has been analyzed from the perspective of a taxpayer who, as a result of partnership-like treatment, enjoys returns on investment that are effectively tax-exempt. However, far less attention has been paid to the government’s perspective. The government—based solely on the operation of tax law—contributes capital to and assumes risks of investments it does not select. This Article argues that when tax policies make the government descriptively less like a taxing entity and more like an investor, it should do what any rational investor is expected to do: identify its attributes as an investor, consider how these attributes affect its investment priorities, and seek ways to align its investments with its priorities. Taking the example of immediate expensing, this Article identifies several changes that the government might make to tax laws to better align capital investing with its own preferences regarding risk, reward, and timing. After identifying several potential policy changes implied by the government’s investment role, this Article considers which changes make sense given the other priorities and roles of the government. In some cases, the government-as-investor perspective offers new justifications for tax policy changes that have long been advocated. In other cases, it suggests changes that should be rejected as inconsistent with the government’s competing priorities and roles. And in several cases, it reveals new policy prescriptions that should be adopted because they advance the government’s investment priorities, while at the same time advancing traditional tax goals and broader social goals. These changes could reduce distortion, increase revenues, promote economic stability, and even protect involuntary and unsecured creditors

Bias correction factors for near-Earth asteroids

Knowledge of the population size and physical characteristics (albedo, size, and rotation rate) of near-Earth asteroids (NEA's) is biased by observational selection effects which are functions of the population's intrinsic properties and the size of the telescope, detector sensitivity, and search strategy used. The NEA population is modeled in terms of orbital and physical elements: a, e, i, omega, Omega, M, albedo, and diameter, and an asteroid search program is simulated using actual telescope pointings of right ascension, declination, date, and time. The position of each object in the model population is calculated at the date and time of each telescope pointing. The program tests to see if that object is within the field of view (FOV = 8.75 degrees) of the telescope and above the limiting magnitude (V = +1.65) of the film. The effect of the starting population on the outcome of the simulation's discoveries is compared to the actual discoveries in order to define a most probable starting population

Inventory of Non-Energy Sources of Greenhouse Gas Emissions in Hawaii Phase I

International concern for global climate change has stimulated a wide range of data gathering and analysis efforts worldwide. The recognition that certain atmospheric gases, many of which are anthropogenic in origin, have the capacity to absorb infrared radiation-and thus trap heat in the atmosphere--has focused research efforts on these so-called "greenhouse" gases. In order for a country to assess its contribution to such global warming, it must first develop an emissions inventory of greenhouse gas sources and sinks. In the United States, the U.S. Environmental Protection Agency (EPA) has recently published such an inventory (U.S. EPA, 1994) and has been funding the efforts of each state to develop their own inventories of sources of greenhouse gas emissions (U.S. EPA, 1995, hereafter titled the State Phase I Workbook). It is this latter document which serves as the basis for the present report by providing the bulk of its overall methodology.Clean Air Branch, Department of Health, State of Hawai

Spectroscopy of Rydberg atoms in non-neutral cold plasmas

The electric field in mm-sized one-component non-neutral plasmas is measured using the Stark effect of Rydberg atoms embedded in them. The plasmas are clouds of cold Rb+Rb+-ions, which are produced by UV photoionization of laser-cooled Rb atoms in a magneto-optic trap. The dependence of the electric field on the number of ions and the Coulomb explosion of the ion clouds have been studied. © 2002 American Institute of Physics.Peer Reviewedhttp://deepblue.lib.umich.edu/bitstream/2027.42/87634/2/89_1.pd