Balancing act: weighing the factors affecting the taxation of capital income in a small open economy

Alternative economic theories yield dramatically different prescriptions for optimal capital taxation in small open economies. On the one hand, foreign firms, including those with investments that yield firm-specific above-normal returns, have a large number of alternative investment opportunities; this suggests that the supply of foreign direct investment is highly elastic, which implies that small open economies should avoid imposing any source-based taxes on capital income. On the other hand, governments invariably want to tax any above-normal returns earned by location-specific capital, especially if the returns accrue to foreigners, and to take full advantage of the potential revenue increase from any “treasury transfer” effect that arises due to residence-based tax systems with foreign tax credits, such as that utilized by the United States. These factors suggest that investment is highly inelastic with respect to capital taxation, so that source-based capital income taxation is desirable; indeed, in one special case, the capital income tax rate for a small open economy should equal the relatively high US tax rate. Moreover, this difficult trade-off is in practice complicated by numerous additional factors: deferral of unrepatriated profits and cross-crediting of foreign tax credits for US multinationals, foreign direct investment from firms from countries that, unlike the United States, operate territorial systems, and the existence of opportunities for both international capital income shifting and labor income shifting. In this paper, we analyze optimal capital income taxation in a small open economy model that attempts to balance these conflicting factors

Organic fouling in forward osmosis: Governing factors and a direct comparison with membrane filtration driven by hydraulic pressure

The fouling behavior of osmotically-driven forward osmosis (FO) is widely believed to be superior with respect to hydraulic pressure-driven membrane applications, based on a number of experiments reported in the literature. However, experimental confounders often exist, preventing fair comparison between the different processes, one being the deployment of non-comparable membranes. This study systematically investigates the conditions influencing organic fouling in FO and compares the behavior in FO and in a hydraulic pressure-driven process, under equivalent conditions. The same state-of-the-art polyamide FO membranes were used in the tests, which were run with real feed solutions and under varying conditions to observe the effect of initial flux, draw solution, and feed ionic composition. The results suggest that initial flux and calcium have the strongest influence on the extent of flux decline and recovery. The influence of different draw solutions in FO becomes apparent when the flux is relatively low. Analysis of the fouling indices and of the effective driving force, as well as direct observation of membranes following fouling, support the conclusion that the fouling behavior of the FO process is not necessarily better compared to an analogous hydraulic pressure-driven one, especially under relevant operational conditions and when the two processes work with similar fluxes