This paper develops a positive theory of overlapping income taxation in a federation of states. Its main motivation comes from the observation that in the U.S. states income tax rates are significantly lower than the federal income tax rate. The analysis shows that in a federal system total productivity dispersion between the states determines the federal tax rate. In fact, there exists a posit...

This paper uses a finite mixture model to uncover heterogeneous income tax rate perceptions, establishing four new results. First, almost half of respondents do not distinguish between marginal and average tax rates. Second, roughly 30 percent of respondents know the statutory marginal tax rates schedule (and answer questions accordingly). Third, among respondents who think all income is taxed ...

The U.S. tax law taxes a multinational firm (MNF)’s global incomes at its home country tax rate. To avoid double taxation, it permits tax cross-crediting. Namely, the global firm can use excess foreign tax credits (FTCs) (the portion of foreign tax payments that exceed the home country tax liabilities) generated from a subsidiary located in a high-tax country to offset the tax liabilities of it...

The Beckerian approach to tax compliance examines how a tax authority can maximize social welfare by trading-off audit probability against the fine rate on undeclared tax. This paper offers an alternative examination of the privately optimal behavior of a tax authority tasked by government to maximize expected revenue. The tax authority is able to trade-off audit probability against audit effec...

The paper presents an econometric accounting of the e¤ective corporate tax rate in Australia for the years 1993 to 1996. The estimation is a panel of Australian …rms that uses a specially gathered …nancial data base. Using …xed and random e¤ects, the model speci…es that the statutory tax rate is estimated as the constant term of the model. An ability to …nd an estimated statutory tax rate that ...

The U.S. tax law taxes a multinational firm (MNF)’s global incomes at its home country tax rate. To avoid double taxation, it permits tax cross-crediting. Namely, the global firm can use excess foreign tax credits (FTCs) (the portion of foreign tax payments that exceed the home country tax liabilities) generated from a subsidiary located in a high-tax country to offset the tax liabilities of it...

We show in a two-period world with endogenous savings and two assets, one of them exhibiting a stochastic return that an interest adjusted income tax is optimal. This tax leaves a safe component of interest income tax free and taxes the excess return with a special tax rate. There is no trade off between risk allocation and efficiency in intertemporal consumption. Both goals are reached. As the...

David Campbell and Michael Parisi are economists with the Individual Statistics Branch Returns Analysis Section. This article was written under the direction of Jeff Hartzok, Chief. T axpayers filed 130.3 million returns for Tax Year 2001, of which almost 94.8 million (or 72.8 percent) were classified as taxable returns. Adjusted gross income (AGI) on taxable returns fell 4.0 percent to $5,847 ...