scholarly journals Personal Tax Planning: GILTI—Introduction to GILTI and Its Application to US Shareholders of Canadian Corporations

2019 ◽  
Vol 67 (2) ◽  
pp. 411-435
Author(s):  
Michael Pereira ◽  
Pinaki Gandhi ◽  
Hena Park
Keyword(s):  
Tax Planning ◽  
Tax Credits ◽  
Tax Rate ◽  
Much Ado About Nothing ◽  
Tax Cost ◽  
The Us ◽  
Tax Returns ◽  
Foreign Corporations ◽  
A Current ◽  
Personal Tax

The new global intangible low-taxed income (GILTI) regime, introduced as part of the 2017 US tax reform, attributes income of certain foreign corporations in excess of an arbitrary 10 percent return to intangible assets and subjects such income to US tax on a current basis for certain US individual shareholders. This article explains how US citizens resident in Canada who are subject to the GILTI rules may effectively manage the adverse implications of the regime by utilizing an election under section 962 of the Internal Revenue Code. The election allows individual shareholders to be taxed at the US domestic corporate tax rate of 21 percent (instead of a maximum personal tax rate of 37 percent), claim a deduction for 50 percent of the GILTI inclusion, and claim foreign tax credits for a portion of Canadian corporate taxes paid. With this election, a combined corporate and personal global tax liability may remain mostly consistent with the pre-GILTI era. On the other hand, if the GILTI exposure is not appropriately managed, the result is significantly different. With proper advice and reporting, for some US shareholders, the GILTI provisions may be a case of "much ado about nothing." However, for US shareholders of corporations that pay the small business rate, there is a small tax cost to the GILTI inclusion for maintaining the benefit of deferral. For all US shareholders of Canadian corporations, there are still some unaddressed issues that add complexity and uncertainty to the preparation of those individuals' US income tax returns.

scholarly journals Personal Tax Planning: Pack Your Suitcase! The Baggage of Canada's Departure Tax

2020 ◽  
Vol 68 (2) ◽  
pp. 661-686
Author(s):  
Sonia Gandhi ◽  
Megan Dalton ◽  
Yooham Jung
Keyword(s):  
Market Value ◽  
Tax Planning ◽  
Comprehensive Overview ◽  
Tax Cost ◽  
Fair Market ◽  
Fair Market Value ◽  
Personal Tax

Canadians who choose to cease their residence in Canada and relocate outside the country may not be aware that their departure can come at a high tax cost. Leaving Canada can give rise to an unexpected and hefty tax bill because Canada imposes a departure tax on individuals who give up their Canadian residence. Relocating Canadians who hold certain assets may be deemed to have sold those assets, at fair market value, at the time of departure. This can give rise to tax even though the assets may not actually have been disposed of. In this article, the authors break through the complexities of Canada's departure tax regime by providing a comprehensive overview of the rules, highlighting key administrative considerations, and identifying planning opportunities to minimize Canada's exit tax.

scholarly journals Bunching to Maximize Tax Credits: Evidence from Kinks in the US Tax Schedule

2020 ◽  
Vol 12 (3) ◽  
pp. 402-432
Author(s):  
Jacob A. Mortenson ◽  
Andrew Whitten
Keyword(s):  
Growth Rate ◽  
Income Tax ◽  
Tax Credits ◽  
Sample Period ◽  
Unique Point ◽  
The Us ◽  
Tax Returns

We explore bunching at US income tax kinks using a panel of 258 million tax returns from 1996 to 2014. We find bunching at seven kinks, with nearly all bunching occurring at kinks maximizing tax credits. In our sample period, the total number of bunchers increased at an 11 percent annualized growth rate, from 134,300 in 1996 to 866,600 in 2014. Approximately two-thirds of these bunchers locate at the unique point that maximizes refunds. Some taxpayers repeatedly bunch at this point, even in consecutive years when different tax kinks are refund maximizing. (JEL H24, H26, H31)

A Re-Examination of the Effects of Personal Deductions, Tax Credits and the Tax Rate Schedule on Income Tax Progressivity and Income Inequality

1999 ◽  
Vol 21 (1) ◽  
pp. 32-44 ◽  
Author(s):  
James C. Young ◽  
Sarah E. Nutter ◽  
Patrick J. Wilkie
Keyword(s):  
Income Inequality ◽  
Income Tax ◽  
Substantial Effect ◽  
Tax Credits ◽  
Return Level ◽  
Tax Rate ◽  
Tax Progressivity ◽  
Tax Returns ◽  
Standard Deduction ◽  
State And Local

We refine and extend Seetharaman (1994) using tax-return-level Statistics of Income data that represent the population of 1992 federal individual income tax returns. Our results indicate that while the standard deduction, exemptions and tax rate schedule continue to contribute the most to progressivity, the rate schedule plays a much greater role (and the standard deduction and exemptions a much lesser role) than previously reported. In addition, consistent with Dunbar (1996), we find that tax credits, in particular the earned income credit, have a substantial effect on overall tax progressivity. Although itemized deductions continue to reduce overall progressivity, with housing costs (mortgage interest and real estate taxes) and state and local income tax deductions being the dominant items, our results indicate that their effect on tax progressivity is smaller than indicated in the earlier study. Finally, we find that the effect of the income tax system on income inequality is more pronounced than previously reported, especially when the data are partitioned by filing status.

Implications of a Mortgage Interest Credit for the United States

2021 ◽  
pp. 109114212110288
Author(s):  
Austin J. Drukker
Keyword(s):  
United States ◽  
The United States ◽  
Marginal Tax Rate ◽  
Middle Income ◽  
Tax Rate ◽  
Mortgage Interest ◽  
Federal Revenue ◽  
The Us ◽  
Tax Returns ◽  
Distribution Of Income

The US mortgage interest deduction (MID) allows homeowners to deduct the interest paid on their mortgages from their federal tax returns, provided that they itemize deductions. Since the benefit depends on a taxpayer’s marginal tax rate, which increases with income, the MID is an “upside-down subsidy” that becomes more valuable for higher-income homeowners. I analyze the implications of converting the US MID to a mortgage interest credit (MIC) and evaluate the effects on federal revenue and the distribution of income. I argue that a MIC could be better targeted at low- and middle-income taxpayers on the margin of homeownership while also being more progressive and less expensive than the current MID.

Identity Politics and Migration

2008 ◽  
Vol 17 (1) ◽  
pp. 155-158
Author(s):  
Vytis Čiubrinskas
Keyword(s):  
National Identity ◽  
Identity Politics ◽  
Host Country ◽  
Social Anthropology ◽  
The Us ◽  
And Migration ◽  
The Uk ◽  
A Current ◽  
Respective Host

The Centre of Social Anthropology (CSA) at Vytautas Magnus University (VMU) in Kaunas has coordinated projects on this, including a current project on 'Retention of Lithuanian Identity under Conditions of Europeanisation and Globalisation: Patterns of Lithuanian-ness in Response to Identity Politics in Ireland, Norway, Spain, the UK and the US'. This has been designed as a multidisciplinary project. The actual expressions of identity politics of migrant, 'diasporic' or displaced identity of Lithuanian immigrants in their respective host country are being examined alongside with the national identity politics of those countries.

A Model of Multinational Income Shifting and an Application to Tax Planning with E-Commerce

2014 ◽  
Vol 36 (2) ◽  
pp. 27-53 ◽  
Author(s):  
Kenneth J. Klassen ◽  
Stacie K. Laplante ◽  
Carla Carnaghan
Keyword(s):  
Tax Planning ◽  
Investment Model ◽  
Income Shifting ◽  
Tax Rates ◽  
Foreign Investments ◽  
Effective Tax Rates ◽  
Tax Rate ◽  
Foreign Earnings ◽  
Joint Consideration ◽  
The U.S

ABSTRACT: This manuscript develops an investment model that incorporates the joint consideration of income shifting by multinational parents to or from a foreign subsidiary and the decision to repatriate or reinvest foreign earnings. The model demonstrates that, while there is always an incentive to shift income into the U.S. from high-foreign-tax-rate subsidiaries, income shifting out of the U.S. to low-tax-rate countries occurs only under certain conditions. The model explicitly shows how the firms' required rate of return for foreign investments affects both repatriation and income shifting decisions. We show how the model can be used to refine extant research. We then apply it to a novel setting—using e-commerce for tax planning. We find firms in manufacturing industries with high levels of e-commerce have economically significant lower cash effective tax rates. This effect is magnified for firms that are less likely to have taxable repatriations. JEL Classifications: G38, H25, H32, M41.

Canada

2018 ◽  
Author(s):  
Joshua T. McCabe
Keyword(s):  
Income Tax ◽  
Child Poverty ◽  
Tax Credits ◽  
Primary Method ◽  
Tax Relief ◽  
The Us ◽  
Cash Benefits ◽  
Child Tax Credit ◽  
Family Allowances ◽  
Initial Change

Chapter 4 examines how Canadian policymakers’ renewed promise to tackle child poverty translated into the Child Tax Benefit, the nonrefundable Child Tax Credit, and the Working Income Tax Benefit. Whereas the logic of tax relief served as the springboard for fiscalization in the US, the logic of income supplementation drove the process in Canada. This difference had important implications for the shape and scope of Canadian tax credits, enabling them to significantly reduce child poverty relative to the much weaker outcomes in the US. Family allowances offered policymakers an alternative to welfare as the primary method of delivering cash benefits to children. Canadian policymakers, including conservative policymakers and profamily groups, saw expanding child tax credits as a way to “take children off welfare” by redirecting benefits through a nonstigmatizing program. The initial change occurred under the Progressive Conservatives in 1992 and was consolidated under the Liberals in 1997.

Optimal Taxation of Families: Mirrlees meets Becker*

2021 ◽  
Author(s):  
Musab Kurnaz
Keyword(s):  
Quantitative Analysis ◽  
Income Distribution ◽  
Income Tax ◽  
Optimal Taxation ◽  
Tax Credits ◽  
Child Rearing ◽  
Welfare Gains ◽  
Us Economy ◽  
Parental Time ◽  
The Us

Abstract This paper studies optimal taxation of families—a combination of an income tax schedule and child tax credits. Child-rearing requires both goods and parental time, which distinctly impact the design of optimal child tax credits. In the quantitative analysis, I calibrate my model to the US economy and show that the optimal child tax credits are U-shaped in income and are decreasing in family size. In particular, the optimal credits decrease in the first nine deciles of the income distribution and then increase thereafter. Implementing the optimum yields large welfare gains.

scholarly journals Land Development and Current Use Assessment: A Theoretical Note

2003 ◽  
Vol 32 (1) ◽  
pp. 46-52 ◽  
Author(s):  
Richard W. England ◽  
Robert D. Mohr
Keyword(s):  
Local Government ◽  
Property Tax ◽  
Land Development ◽  
Policy Tools ◽  
Tax Rate ◽  
Assessment Program ◽  
Analytical Results ◽  
A Current

This paper jointly models a landowner's decision to develop a parcel and the option to enroll that parcel in a current use assessment program. The analytical results highlight different factors that influence the effectiveness of a current use program in delaying development. The results also underscore the difficulty a local government might have in influencing the behavior of the landowner. Except for altering eligibility rules, a local government employing current use assessment has but two policy tools: a penalty for development and the property tax rate.

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