Tax Evasion from a Policy Perspective: The Case of the Motor Fuels Tax

In recent years, many state legislatures have proposed, considered, and adopted legislation intended to thwart fuel tax evasion. Despite the recent political activity of state legislatures to increase fuel tax compliance, there is relatively little research examining the evasion of excise taxes in general or the motor‐fuel tax in particular. This article examines the issues of fuel tax evasion from a policy perspective. We discuss the vulnerability of the fuel tax to evasion and examine how state legislatures in the southern region have responded to the tax evasion issue. We focus the examination on four major initiatives implemented at the federal level in four broad policy areas: tax administration, penalties and punishments, liability, and visibility and enforcement. These findings provide important insight for developing new strategies to enhance compliance to the fuel tax in particular and excise taxes in general. Furthermore, we discuss how issues of fuel tax compliance can be extended to other compliance issues such as Medicare fraud.     

Tax morale in Latin America

In the tax compliance literature, there is a lack of empirical evidence on the degree of tax morale in developing countries. As a novelty, this paper focuses thus on Latin America, analysing tax morale as a dependent variable and searching for factors that systematically affect tax morale, working with the two data sets Latinobarómetro and World Values Survey. Our findings indicate that there is a significant correlation between tax morale and the size of shadow economy. Furthermore, people who said they knew/have heard about practised tax avoidance have a significantly lower tax morale than others. Looking at individuals’ perception of reasons for tax evasion we found that the tax burden, lacking honesty, and corruption are seen as the main factors. We observed a significantly lower tax morale in South America/ Mexico than in the Central American/Caribbean area. Furthermore, trust in the president and the officials, the belief that other individuals obey the law and a pro democratic attitude have a significant positive effect on tax morale.     

Estimating Tax Evasion Losses: The Road Fund Case

Federal, state, and local government concern about the loss of state revenues from tax evasion has increased in recent years. In order for policymakers to address this issue effectively, more information regarding the nature and magnitude of the problem is needed. This article reports on research that focuses on estimating the level of road fund tax evasion for several states. Estimates of road fund tax evasion are developed from previous research regarding individual state evasion levels, perceptions of road fund tax evasion by state revenue officials, and a statistical estimate of road fund tax evasion.     

Tax exporting,federal deductibility,and state tax structure

This paper studies the interaction between the federal and state tax systems during the 1980s and, in particular, considers how the Tax Reform Act of 1986 affected state tax structure. Using a panel data set on state governments over a nine-year period, I estimate tax share equations for six categories of taxes. I find that the state personal income tax is sensitive to changes in its tax price, but find a much smaller sensitivity to changes in tax prices for the general sales tax. I then consider various reasons why the sales tax does not exhibit a sensitivity to changes in tax price and consider the implications of these results for policymakers. The regression results suggest that different income groups are concerned with different tax instruments. Moreover, the results motivate a possible benefit approach to taxation at the state level. Linking taxes, about which a particular income group is most concerned, to services received by that group might generate additional political support for state tax systems during a time when many states are facing fiscal crisis.     

Who governs? Delegations and delegates in global trade lawmaking

Who governs in the international organizations (IOs) that promulgate global norms on trade and commercial law? Using a new analytic approach, this paper focuses on previously invisible attributes of a global legislature – the state and non‐state delegations and delegates that create universal norms for international trade and commercial law through the most prominent trade law legislature, the UN Commission on International Trade Law (UNCITRAL). Based on ten years of fieldwork, extensive interviews, and unique data on delegation and delegate attendance and participation in UNCITRAL's Working Group on Insolvency, we find that the inner core of global trade lawmakers at UNCITRAL represent a tiny and unrepresentative subset of state and non‐state actors. This disjunction between UNCITRAL's public face, which accords with a global norm of democratic governance, and its private face, where dominant states and private interests prevail, raises fundamental questions about legitimacy and efficacy of representation in global lawmaking.     

The role of tax preparers in tax compliance

This paper assesses the influence of tax preparers on tax compliance. Using data from the Internal Revenue Service's (IRS) Taxpayer Compliance Measurement Program and an index of legal ambiguity based on Revenue Rulings, the impact of preparation mode (paid third party vs. self) on compliance at the level of the return line item is probed. The results suggest that preparers contribute to compliance by enforcing legally clear requirements but also contribute to noncompliance, as measured by the IRS, by helping taxpayers take advantage of legal ambiguity. Furthermore, an analysis of a campaign to enforce estimated tax requirements conducted by the Pennsylvania Department of Revenue suggests that tax preparers are also an important network for communicating tax agency enforcement priorities to taxpayers.An earlier version of this paper was prepared for the conference on Federal/State Research sponsored by the U.S. Internal Revenue Service.     

Tax Increment Financing

Tax Increment Financing (TIP) uses the increase in taxes resulting from an area's redevelopment to help subsidize the costs of redevelopment. The paper focuses on the mechanisms and problems of using real property tax increments under Illinois law. Two distinct methods of calculating tax increments, the "aggregate" and "parcel" methods, are examined. A briefcase study is provided.     

Judicial policy‐making and the evolving rotection of human rights: The European court of human rights in comparative perspective

This contribution is a comparative analysis of three attempts to strengthen the supranational protection of human rights in an increasingly transnational world. It focuses on the Human Rights Committee of the United Nations, the European Court of Human Rights and the Inter‐American Court of Human Rights. The recent decision by the Inter‐American Court on the forced disappearance of individuals by state or para‐state forces illustrates the important role of cross‐pollenisation from the European Court and the United Nations. It further demonstrates how judges on supranational courts attempt to make law in the face of uncertain government compliance.     

Cross‐Border Shopping and State Use Tax Liabilities: Evidence from eBay Transactions

Online commerce presents consumers with a convenient way of shopping outside of their local jurisdiction, and this online purchase decision is capable of affecting in significant ways the sales and use tax collections of state governments. However, the actual revenue impact has proven difficult to estimate. There is considerable work that examines the revenue impact of seller compliance with sales taxes. However, there is little work on buyer compliance with use taxes. In this paper, we investigate the potential impact of cross‐border shopping on state use tax liabilities of buyers, using data from the largest online consumer‐to‐consumer and business‐to‐consumer marketplace, eBay.com . We collect our own data on actual cross‐border shopping transactions from eBay, focusing upon a “representative” commodity classification and a “typical” day; these data consist of nearly 21,000 eBay listings generated by roughly 7,000 individual sellers with over 9,000 buyers. These data allow us to examine the extent of actual, not estimated, cross‐border shopping by buyers, and the subsequent potential impact of this cross‐border shopping on state use tax liabilities. Our results indicate that cross‐border shopping is highly prevalent on eBay, with out‐of‐state purchases accounting for on average 94 percent of the volume of a state's purchase transactions. Even so, given the limited volume of eBay‐based transactions relative to total sales transactions, the likely impact of cross‐border transactions on state use tax revenue streams is quite low, at least at present, typically less than one percent of actual state sales tax revenues.     

Fiscal Capacity and Tax Effort of the American States: Trends and Issues

The author examines the historic context of state taxing power and fiscal capacity, and the current efforts of the U.S. Advisory Commission on Intergovernmental Relations to measure fiscal capacity and tax effort using a Representative Tax System (RTS). The two most commonly used methods of distributing federal aid to states are population and personal income, both incomplete measures of fiscal capacity. RTS estimates how much revenue each state and its localities would raise if it levied the national average tax rate for commonly used state and local taxes. The author considers the strengths and weakness of RTS as a measure of fiscal capacity and examines state rankings and trends since 1975.     

A law and economics perspective on terrorism

This paper reviews the existing law and economics literature on crime, noting where various models might apply to the terror context. Specifically, it focuses on two strands of the literature, deterrence and incapacitation. It considers anti-terror measures enacted by different countries, highlighting how the details of the laws correspond to the insights from economic models of crime. In conclusion, the paper proposes an efficient sorting mechanism in which individuals will be provided with incentives to reveal their type to law enforcement authorities.     

论纳税人诚实推定权的入法途径

诚实推定权由纳税人财产权与人格尊严权衍生而来,在立法中加以确认有助于落实税收法定、践行量能课税和提高纳税人遵从度。诚实推定权借鉴了刑法上的无罪推定和民法上的善意推定,其基本内涵是税务机关认为纳税人有少缴税款嫌疑时,应由该机关承担举证责任,证明强度应达到优势证据标准。我国应在修改《税收征收管理法》时,明确表达纳税人享有诚实推定权,同时准确界分纳税人的协力义务和税务机关的举证责任,强调逃税行为必须具备主观故意的要件,合理限定税收检查权。诚实推定权入法将对税收征纳实践产生影响,提高现有“计税依据明显偏低”的认定标准,使纳税人的正当理由诉求更有可能被认可,对逃税行为的界定也将更为精确。     

Improving the Effectiveness of the International Law of Human Trafficking: A Vision for the Future of the US Trafficking in Persons Reports

In 2000, the United States Congress passed the Victims of Trafficking and Violence Protection Act requiring its State Department to issue annual Trafficking in Persons Reports (TIP Reports) describing “the nature and extent of severe forms of trafficking in persons” and assessing governmental efforts across the world to combat such trafficking against criteria established by US law. This article examines the opportunities and risks presented by the TIP Reports, tracing their evolution over the past decade and considering their impact on the behavior of states. In looking to the future, the article focuses on how this influential unilateral compliance mechanism could improve its legitimacy, respond to negative impacts, and better contribute to the international legal regime around trafficking.     

Targeting in Economic Development: Comparative State Perspectives

This article examines recent efforts to target state industrialpolicy along three dimensions: sectoral aid to specific businessesor economic activities, geographic aid to growing or decliningregions, and direct assistance to the unemployed. While thestates have done better with sec-toral targeting than opponentsof a federal industrial policy have feared, industrial policymust compete with many other state programs, including moretraditional economic development efforts based on advertisingand tax expenditures. Only a few states have managed to channelmuch state aid to displaced workers or distressed communities.Despite some evidence as to the success of industrial policyfocused on limited areas or activities, dilution of policy focusand underinvestment of resources characterize state industrialpolicy efforts to date.     

Structure of State‐Level Tax and Expenditure Limits

While much consideration has been given to the approval process, base classification, and codification of tax and expenditure limits (or TELs), these factors tell us nothing about how they actually work. This study focuses exclusively on the technical elements of these limits and finds how states estimate their limits have over time eroded their potency. More specifically, if a state resets or rebases its limit annually by using actual revenues or expenditures for the preceding year, the limit will trend closely with actual revenues or expenditures, effectively restricting growth in spending as prescribed by law. However, if the law requires a state to estimate its limit using the appropriation limit for the preceding year instead of actual revenues or expenditures, that is, without rebasing, the limit will reflect cumulative changes to the base when it was first approved. Over time, the TEL cap is significantly above the states revenues or expenditures as it remains unaffected by the state's underlying fiscal and economic environment.     

Diffusion of Compliance in the ‘Race towards Brussels?’ A Spatial Approach to EU Accession Conditionality

Previous studies identified several determinants that help explain candidate states’ compliance with EU accession conditionality. However, one influence has largely been neglected so far: states’ spatial dependency. Is it possible to observe diffusion to the extent that states’ interlinkages allow their compliance with the acquis communautaire to be assessed? Are candidate states more – or perhaps even less – likely to comply with EU law when other candidates do? The paper seeks to address these questions. By building on existing research on policy diffusion, it develops a theoretical framework for studying candidates’ compliance with EU law over the accession process according to their spatial dependence. The theoretical argument focuses on ‘competitive learning’ and is tested with quantitative data. The results suggest that candidates’ levels of compliance are indeed driven by spatial interlinkages; however, free riding seems more prevalent than enhanced compliance.     

Interest group demand for taxation

Researchers have typically ignored the determinants of the tax structure of the public sector. Political scientists have concentrated their analyses on the expenditure side of the public ledgers while economists have avoided the issue by assuming that taxes are exogenously determined. In this paper we have shown that a behavioral model of political interest groups can be employed to gain insights into the political selection of taxes. The theory provides a general complement to the well-documented analysis of special interest demand for public expenditures.Our analysis raises several important policy questions. First, is the influence of interest groups on the determination of tax systems desirable from a public policy perspective? For example, special interest groups dominated by high and middle income individuals may prefer regressive tax systems which reduce their own tax burden. Certainly the impact of interest groups on the well-known regressivity of state and local tax systems is an area worthy of additional investigation.     

Wealth-Transfer Taxes in U.S. Fiscal Federalism: A Levy Still in Need of Reform

Wealth-transfer taxes are federal and state levies on the valueof estates, inheritances, and gifts. Because the federal governmentallows a limited tax credit, repeal of the federal tax has implicationsfor state governments. This article discusses the economic justificationof taxing wealth transfers and provides data on the importanceof the tax from 1977 to 1997. We measure the degree of variationin the use of the tax among the states and pinpoint those statesfor which death taxation is most important. Wealth-transfertaxation needs reform but, repeal of the federal tax is inappropriate.Instead, the state levies should be abandoned. We conclude byproposing to repeal the state taxes and reduce the federal taxby an amount equivalent to the value of the federal tax-credit.The resulting revenues, however, would not to be garnered bythe federal government but returned as revenue-sharing fundsto the resident state of the decedent.     

The political affiliation effect on state credit risk

Past research largely has ignored the effects of political parties on states’ default risks. This paper addresses that question by analyzing the response of credit spreads to weekly polling data from 17 gubernatorial elections between 2009 and 2012, during the 6 months prior to Election Day. The findings are that political affiliation has a significant effect on states’ default risks. The estimated effect of electing a Republican governor is a 6% reduction in the credit spread of the state. The effect prevails regardless of the party in control of the state legislature, and it is larger when gubernatorial elections are contested closely. Set in the context of case law, the paper links higher tax levels to greater credit risk. Moreover, an analysis of the candidates’ campaign promises suggests that stronger positions against tax increases are associated with less default risks. The results of the paper are therefore consistent with the empirical evidence suggesting that Republicans prefer lower taxes.     

Can State Review of Local Planning Increase Housing Production?

Abstract

To increase housing production and make the distribution of affordable housing more equitable, several states subject local land use planning to review by state agencies or courts. Focusing an empirical analysis on California, this article considers the potential efficacy of these reviews in contributing to the overall supply of housing. Past studies of other intergovernmental mandates suggest that their institutional design helps determine their success.

A comparison of four states indicates that approaches differ considerably in how they determine local housing needs, evaluate local efforts prospectively or retrospectively, and penalize noncompliance. California's housing element law, which mandates prospective local planning for quantifiable housing goals, gives state staff the power to review local plans for compliance with statutory requirements. However, multivariate analysis indicates that the compliance status of California municipalities in 1994 did not predict the number of single‐family or multifamily housing permits issued from 1994 to 2000.