Taxing Stock Options: Efficiency, Fairness and Revenue Implications

The federal Liberals and the NDP are right about this much: There is a more sensible way to tax the stock options that are granted as compensation by corporations than the approach the federal government takes now. But both parties are wrong about how much revenue an appropriate change in current tax policy will add to the treasury. Far from the half-billion dollars or more that both parties claim they will raise in federal tax revenue by changing the taxation of stock options, the appropriate reform will virtually raise no revenue. It could actually result in marginally lower tax revenue. As it stands, stock options are treated differently than salary and other forms of cash compensation when it comes to taxing an employee or director, in that they are subject to only half taxation, similar to capital gains. They are also treated differently than cash compensation for the corporation granting the options, in that they cannot be deducted from corporate income tax. The federal NDP and Liberals have both accepted the growing criticism, which only intensified in the aftermath of the 2008 financial crisis, that the lower tax rate is an unfair tax break for those employees who receive stock options. Both parties have proposed to change that, leaving an exemption for startup companies only, with the NDP proposing full personal taxation for all stock options except for start-up companies and the Liberals proposing it for options-based compensation exceeding $100,000. Treating stock options the same as cash compensation would indeed be more tax efficient, reducing the distortionary effect that can influence company compensation packages to give more weight to stock options and less to cash than they might otherwise. But the only way to ensure that efficiency is by treating both the personal tax side of the benefit, and the corporate tax side of the benefit, in the same way as other employee compensation. That is, applying full taxation to the recipient means also allowing the same deduction to an employer allowed for other forms of compensation. Changing only the personal side merely replaces one type of distortion with another, and discourage employers from granting options, by making it a more expensive form of compensation compared to any other. The NDP predicts that its proposal to impose full personal taxation on stock options will raise annually$500 million leading to a tax revenue collection of $2 billion in the next four years. The Liberals also predict that their similar proposal will actually raise more: approximately$560 million annually. But neither proposal acknowledges the necessary symmetrical adjustment for corporations — the tax deductibility of stock-option benefits. If we estimate the federal and provincial revenue effect from the full taxation of stock options using data from recent years reflecting the options granted by the largest 100 public corporations in Canada, projected forward to 2015, we find that the tax revenue gain is actually $1.168 billion. But the tax revenue loss, by allowing corporate tax deductions for stock-option benefits, is$1.318 billion. After one more adjustment for the gain from the personal tax on corporate tax saving on the dividend received by the investor, the net effect for federal and provincial governments is a slight net loss of $12 million. The NDP and the Liberals are onto a good idea in proposing a more efficient way to tax stock options. Regardless of who wins the election, it is the right approach. But it cannot be done fairly, or successfully, without also including a deduction for the employer. And once that is accounted for, as sensible as their proposals may be, neither party should expect any extra spending money to come from implementing this change

The Problem with the Low-Tax Backlash: Rethinking Corporate Tax Policies to Adjust for Uneven Reputational Risks

When a major corporation is found to be paying little or no taxes, public backlash and media furor over the issue may ensue. Some governments may well be just fine with it, while others like U.S. may take steps to ensure companies pay more tax. Sometimes, companies being in a non-taxpaying position properly reflects appropriate tax policy. That explanation, however, does not sell lattés, which is why in 2012, after the British public grew outraged over the discovery that Starbucks was paying no corporate taxes in the U.K., the coffee retailer actually volunteered to just write a cheque to the government. The reputational damage to Starbucks’ brand, the company calculated, was not worth the money it was saving in avoiding taxes, even if it was doing so perfectly legally. The fear of this kind of reputational damage can foil the very taxation policies that governments design specifically as a means to tax corporations fairly, efficiently and competitively. It may be good tax policy to allow corporations various deductions, or the ability to carry forward or carry back losses, but it can be politically vexatious. U.S. President Barack Obama demonstrated that explicitly when he suggested certain American companies using so-called tax inversions to relocate their headquarters to low-tax jurisdictions, were failing in their “economic patriotism.” Yet more multinationals than ever are legally and quite appropriately using tax strategies to minimize their taxes in various jurisdictions to the point where they are paying little to no corporate tax. For some corporations, the risk of public backlash is greater than it is for others: Starbucks and Facebook, being consumer-facing companies with a great deal of brand goodwill, have a lot more at risk than do Pfizer and Oracle. This risk makes the playing field for taxation less level, jeopardizing the fundamental tax principle of horizontal equity — that those of similar means should pay similar taxes. If Starbucks feels pressured to pay extra taxes, then the tax system is not functioning optimally. This emerging reputational risk is a new dimension governments are going to have to take into account when designing tax policy. Understanding that there is more to consider than the financial implications of a tax policy should and will have an effect on the way policies are designed. One important approach that governments should take is to avoid the practice of targeted tax incentives, such as tax holidays or accelerated depreciation. The reputational risk will see some companies willing to take the government up on tax breaks, but others may prefer to pass. Better to focus on more general corporate tax reductions, which will be less distortive and unfair to those companies at greater risk of reputational damage. In some jurisdictions, governments could also consider requiring some level of minimum taxation (as Ontario does), ensuring that every profitable company pays at least something every year. This will have an impact on economic efficiency, but it will help level the playing field for all corporations, regardless of their varying degrees of reputational risk. The most effective measure still available to governments is one they should be pursuing anyway: tax levels that are internationally competitive and, therefore, broaden the corporate tax base while promoting neutrality. Canada’s several targeted programs — such as accelerated depreciation for manufacturing equipment and a generous capital-cost allowance for liquefied natural gas plants — only hurt neutrality. They also make it more likely that a particular company may find itself in an uncomfortable controversy, as Starbucks did. Focusing on international tax competitiveness, rather than targeted tax breaks, is the way to build the fairest system for all companies, whether they are nervous about their reputation or not

Tax Policy Trends: Small Business Tax Cut not Enough – U.S. Tax Reforms will make U.S. more Attractive for Start-Ups

SMALL BUSINESS TAX CUT NOT ENOUGH  U.S. TAX REFORMS WILL MAKE U.S. MORE ATTRACTIVE FOR START-UPS Big businesses start small. With the proposed Republican tax reform announced on September 28th, small business taxes will be dropped sharply making it attractive for start-up companies to locate and grow in the U.S.This is in sharp contrast to the recent debate in Canada whereby small businesses will be taxed more heavily under the recent proposals despite a further reduction in the small business tax rate

A Study of Malignant Thyroid Tumours Presenting as Solitary Nodule in Tertiary Referral Centre

BACKGROUND: Solitary thyroid nodules have a higher risk of malignancy than multiple nodules. It is generally recommended that all thyroid nodules > 1cm in size should undergo evaluation as the incidence of malignancy is increasing. Size of the nodule has no proven relation with the malignancy risk prediction. Fine-needle aspiration cytology is recommended to be a cost-effective procedure in the initial assessment and management of thyroid nodules. The challenge of management is to identify benign nodules and to accurately diagnose and treat malignant disease early. OBJECTIVES: 1. The purpose of this study is to assess the role of clinical evaluation and investigations in diagnosing malignant thyroid tumours presenting as solitary thyroid nodule. 2. To correlate the pre operative tissue diagnosis of follicular neoplasms in Solitary nodule with intra-operative frozen section and post-operative HPE reports. 3. To identify the type of malignancy arising from Solitary nodule and calculate the incidence of patients requiring completion thyroidectomy. MATERIALS AND METHODS: Study Centre: Institute of General Surgery, Madras Medical College and Rajiv Gandhi Government General Hospital, Chennai. Duration of Study: May 2017 to October 2018. Study Design: Prospective study (Observational). Sample Size: 50 { n = Z2 1-α/2 P(1-P) /e2 P=3% e= 5% Z=1.96}. Inclusion Criteria: All patients presenting with a Solitary nodule discovered by a doctor on routine neck palpation or by the patients during self-examination were enrolled into the study. Solitary thyroid nodule patients who are clinically and biochemically euthyroid are alone included in the study. Exclusion criteria: Patients with multinodular goitre / diffuse goitre and those who are hyperthyroid are excluded from the study. Patients not consenting for the Research study were also excluded. Pregnant women. Age 80 years. RESULTS: Commonest presentation of solitary thyroid nodule was asymptomatic. The Peak incidence of solitary nodule was observed in 3rd to 4th decade, constituting 80% of the cases studied. Females predominated in number over males in occurrence of solitary nodule in ratio of 4:1. Only 8% of all clinically diagnosed solitary nodules turned out to be multi-nodular goiter. USG features suspicious of malignancy were present in 16 out of 50 patients sent for Ultrasonogram neck which represents 32% of cases. The common cause of solitary nodule was papillary carcinoma (38%). Incidence of malignancy in solitary thyroid nodule was 68%. Male to female ratio in case of malignant nodule was1:5. Incidence of carcinoma in males presenting as solitary nodule was higher (25%) compared to that of females (10.87%). The most common cause of malignancy was papillary carcinoma (38%) followed by follicular carcinoma (36%). INTERPRETATION AND CONCLUSION: Solitary nodule of thyroid are more common in females. • USG can be accurately used to detect patients with malignancy who clinically present as solitary nodule of thyroid. • The most common cause of malignancy in solitary nodule is papillary carcinoma followed by follicular carcinoma. • Proper correlation of USG with FNAC can be used to predict malignancy preoperatively and hence managed with total thyroidectomy +/- neck dissection. • Use of intra operative frozen section for NIFTP Non Invasive Follicular Thyroid Neoplasm with Papillary like Features / Follicular Variant of Papillary Thyroid Carcinoma (FVPTC) is still debatable. • With the advent of high end sonograms, nearly 80% of the malignancies are picked up and hence the need for completion thyroidectomy is circumvented. • Similarly benign appearing nodules could be managed with conservative surgery where the post operative complications of much radical surgery can be avoided

EXPERIMENTAL AND MATHEMATICAL INVESTIGATION ON PERFORMANCE AND EMISSION CHARACTERISTICS OF OXYGEN ENRICHED AIR IN INTAKE OF A SINGLE CYLINDER DIESEL ENGINE

This  research revealed  that the  single cylinder diesel  engine performance and  emission   characteristics are improved by the oxygen content enriched  intake air and was varied between 21% to 27 % (ie., 21,23,25,27%  by the volume). The effects of enriched oxygen with different loads are analyzed in terms of brake thermal efficiency, specific fuel consumption, and also the environmental pollutant like NOx, CO, HC and Smoke. The   mathematical experiment were designed using a statistical tool know as design expert based on response surface modeling. Using RSM to predict the response parameter like brake thermal efficiency, brake specific fuel consumption, carbon monoxide, hydrocarbon, nitrogen oxides and smoke. Optimization of the input and response parameters is also done using desirability approach. Finally a software tool is developed using LabVIEW software for predicting engine parameters when the engine input parameters are given

Uptake and movement of phosphorus (32P) in grapes

Phosphorus applied into the soil, appeared in the vine shoots within 24 hours of application, and the 6th bud of the shoot, which is generally the most fruitful region of shoots in the Anab-e-Shahi variety of grape, accumulated a high concentration of fertilizer P

Real-space imaging of quantum Hall effect edge strips

We use dynamic scanning capacitance microscopy (DSCM) to image compressible and incompressible strips at the edge of a Hall bar in a two-dimensional electron gas (2DEG) in the quantum Hall effect (QHE) regime. This method gives access to the complex local conductance, Gts, between a sharp metallic tip scanned across the sample surface and ground, comprising the complex sample conductance. Near integer filling factors we observe a bright stripe along the sample edge in the imaginary part of Gts. The simultaneously recorded real part exhibits a sharp peak at the boundary between the sample interior and the stripe observed in the imaginary part. The features are periodic in the inverse magnetic field and consistent with compressible and incompressible strips forming at the sample edge. For currents larger than the critical current of the QHE break-down the stripes vanish sharply and a homogeneous signal is recovered, similar to zero magnetic field. Our experiments directly illustrate the formation and a variety of properties of the conceptually important QHE edge states at the physical edge of a 2DEG.Comment: 7 page

Simulation of various DC-DC converters for photovoltaic system

This work explains the comparison of various dc-dc converters for photovoltaic systems. In recent day insufficient energy and continues increasing in fuel cost, exploration on renewable energy system becomes more essential. For high and medium power applications, high input source from renewable systems like photovoltaic and wind energy system turn into difficult one, which leads to increase of cost for installation process. So the generated voltage from PV system is boosted with help various boost converter depends on the applications. Here the various converters are like boost converter, buck converter, buck-boost converter, cuk converter, sepic converter and zeta converter are analysed for photovoltaic system, which are verified using matlab / simulink

Effect of food deprivation and hormones of glucose homeostasis on the acetyl CoA carboxylase activity in mouse brain: a potential role of acc in the regulation of energy balance

We studied the regulation of brain acetyl CoA carboxylase (ACC) activity during food deprivation and under the influence of hormones of glucose homeostasis: glucagon and insulin. Mice were deprived of food and water for time periods of 1, 3, 6, 9, 12 and 24 hours and were then allowed to re-feed for 5, 30 and 60 minutes. Mice that were deprived for up to 6 h, and then re-fed for 60 min, consumed the same amount of food compared to the ad libitum (control) animals. However, after 9 h of deprivation, mice consumed only 50% of food present even after 1 h of re-feeding, compared to the controls. The ACC activity was measured in the whole mouse brain of controls and after 1, 3, 6, 9, 12, and 24 h of food deprivation. Brain extracts assayed from control mice expressed an ACC activity of 0.988 ± 0.158 fmol/min/mg tissue without citrate and 0.941 ± 0.175 fmol/min/mg tissue with citrate. After 1 h of food deprivation, the total ACC activity without citrate decreased to 0.575 ± 0.087 fmol/min/mg and in the presence of citrate, 0.703 ± 0.036 fmol/min/mg activity was measured. The citrate-dependent ACC activity decreased over time, with only 0.478 ± 0.117 fmol/min/mg of activity remaining after 24 h. Intraperitoneal (i.p.) injections of insulin, glucagon and phosphate buffered saline (PBS) were performed and whole brain ACC activity measured. After hormone administration, there were no significant differences in ACC activity in the presence of citrate. However, in the absence of citrate, there was a significant 20% decrease in ACC activity with glucagon (1.36 ± 0.09 fmol/min/mg) and a 33% increase with insulin (2.49 ± 0.11 fmol/min/mg) injections compared to PBS controls (1.67 ± 0.08 fmol/min/mg). Neuropeptide Y (NPY) levels of corresponding brain extracts were measured by ELISA (OD) using anti-NPY antibody and showed an 18% decrease upon insulin injection (0.093 ± 0.019) and a 50% increase upon glucagon injection (0.226 ± 0.084) as compared to controls injected with PBS (0.114 ± 0.040). Thus, we postulate that the changes in ACC levels under metabolic conditions would result in a fluctuation of malonyl CoA levels, and subsequent modulation of NPY levels and downstream signaling

Impact Assessment of Mercury Accumulation and Biochemical and Molecular Response of Mentha arvensis

The present study was focused on examining the effect of Hg oxidative stress induced physiochemical and genetic changes in M. arvensis seedlings. The growth rate of Hg treated seedlings was decreased to 56.1% and 41.5% in roots and shoots, respectively, compared to the control. Accumulation of Hg level in both roots and shoots was increased with increasing the concentration of Hg. Superoxide dismutase (SOD), catalase (CAT), and ascorbate peroxidase (APX) activities were found to be increased with increasing the Hg concentration up to 20 mg/L; however, it was decreased at 25 mg/L Hg concentration. The POX enzyme activity was positively correlated with Hg dose. The changes occurring in the random amplification of ploymorphic DNA (RAPD) profiles generated from Hg treated seedlings included variations in band intensity, disappearance of bands, and appearance of new bands compared with the control seedlings. It was concluded that DNA polymorphisms observed with RAPD profile could be used as molecular marker for the evaluation of heavy metal induced genotoxic effects in plant species. The present results strongly suggested that Mentha arvensis could be used as a potential phytoremediator plant in mercury polluted environment