An Examination of the Relations among Tax Preferences, Implicit Taxes, and Market Power in a Noncompetitive Market

2006 ◽  
Vol 28 (2) ◽  
pp. 47-67 ◽  
Author(s):  
Debra A. Salbador ◽  
Valaria P. Vendrzyk
Keyword(s):  
Market Power ◽  
Relative Position ◽  
Tax Reform ◽  
Empirical Work ◽  
Significant Relation ◽  
Defense Contractors ◽  
Defense Contracting ◽  
Tax Returns

We examine whether market power within a noncompetitive industry is related to a firm's ability to retain the benefits received from statutory tax preferences. Using both a market-based measure and an accounting-based measure proposed by Dunbar and Sansing (2002), we estimate tax preferences for a sample of 60 defense contractors for the three years preceding (1984–1986) and immediately following (1988–1990) the passage of the Tax Reform Act of 1986 (TRA86). We confirm that defense contractors enjoyed positive tax preferences in 1984–1986, which decreased significantly with the passage of TRA86. We find a negative and significant relation between changes in tax preferences and changes in pre-tax returns, which is consistent with implicit tax theory and supported by prior empirical work. We also find that this relation is significantly less negative for firms ranked among the Top 100 defense contractors than for unranked contractors. We conclude that market power is positively related to a firm's ability to retain the benefits of tax preferences, where market power is defined as relative position within the noncompetitive defense contracting market.

The Relation between Cost Shifting and Segment Profitability in the Defense-Contracting Industry

2002 ◽  
Vol 77 (4) ◽  
pp. 949-969 ◽  
Author(s):  
Annie S. McGowan ◽  
Valaria P. Vendrzyk
Keyword(s):  
Market Power ◽  
Government Contracts ◽  
Cost Shifting ◽  
Defense Contractors ◽  
Defense Contracting ◽  
Government Work ◽  
Defense Contracts

We test the conjecture from prior research that defense contractors' excess profitability in the 1980s stemmed from their ability to shift common overhead costs to government contracts that typically allow cost reimbursement or price renegotiation (Rogerson 1992; Thomas and Tung 1992; Lichtenberg 1992). Although we confirm prior evidence that defense contractors enjoyed abnormally high profitability on their government work in the 1984–1989 period (a period of relatively low competition for defense contracts), we find no evidence that this excess profitability is attributable to cost shifting. In addition, we find no evidence that the Top 100 defense contractors (firms that likely wield above-average market power) are able to use cost shifting to exploit a lack of competition in the industry. Our results suggest that, contrary to the conjectures in prior research, the unusually high profitability reported on government contracts in 1984–1989 is more likely attributable to nonaccounting explanations than to cost shifting.

Vertical Boilerplate

2017 ◽  
Author(s):  
James Gibson
Keyword(s):  
Market Power ◽  
Real World ◽  
Empirical Work ◽  
Full Scale ◽  
Market Mechanism ◽  
Law School ◽  
Information Cost ◽  
Information Costs ◽  
Policy Proposals ◽  
Radical Solution

Despite what we learn in law school about the “meeting of the minds,” most contracts are merely boilerplate—take-it-or-leave-it propositions. Negotiation is nonexistent; we rely on our collective market power as consumers to regulate contracts’ content. But boilerplate imposes certain information costs because it often arrives late in the transaction and is hard to understand. If those costs get too high, then the market mechanism fails. So how high are boilerplate’s information costs? A few studies have attempted to measure them, but they all use a “horizontal” approach—i.e., they sample a single stratum of boilerplate and assume that it represents the whole transaction. Yet real-world transactions often involve multiple layers of contracts, each with its own information costs. What is needed, then, is a “vertical” analysis, a study that examines fewer contracts of any one kind but tracks all the contracts the consumer encounters, soup to nuts. This Article presents the first vertical study of boilerplate. It casts serious doubt on the market mechanism and shows that existing scholarship fails to appreciate the full scale of the information cost problem. It then offers two regulatory solutions. The first works within contract law’s unconscionability doctrine, tweaking what the parties need to prove and who bears the burden of proving it. The second, more radical solution involves forcing both sellers and consumers to confront and minimize boilerplate’s information costs—an approach I call “forced salience.” In the end, the boilerplate experience is as deep as it is wide. Our empirical work should reflect that fact, and our policy proposals should too.

scholarly journals EFEKTIVITAS PENGGUNAAN E-FILING DALAM RANGKA MENINGKATKAN KEPATUHAN PELAPORAN SURAT PEMBERITAHUAN TAHUNAN WAJIB PAJAK ORANG PRIBADI

2020 ◽  
Vol 2 (1) ◽  
pp. 12-20
Author(s):  
Endang Winarsih ◽  
Asyarif Khalid ◽  
Forene Yenjeni
Keyword(s):  
Research Methods ◽  
Information And Communication Technology ◽  
Communication Technology ◽  
Tax Reform ◽  
Public Awareness ◽  
Qualitative And Quantitative ◽  
Tax Returns ◽  
Directorate General ◽  
Information And Communication ◽  
Lack Of Knowledge

In an effort to maximize Taxpayer Compliance, the Directorate General of Taxation always optimizes services so as to increase public awareness of orderliness as taxpayers, one way to do tax reform is to utilize information and communication technology by implementing e-filing systems. This research is a Mix Method research in which research combines two research methods at the same time, qualitative and quantitative. The purpose of this study is to determine the Effectiveness of the Use of E-Filing in the Framework of Improving Compliance Reporting the Obligatory Annual Notification of Individuals. The results of this study indicate that the use of e-filing has been successful in increasing the compliance of individual taxpayers by increasing the annual tax return report of individual taxpayers. Taxpayers find it easy to report their annual tax returns by using e-filing. In addition, taxpayers are aware of their obligations as taxpayers. However, there are some obstacles in implementing e-filing, namely the lack of knowledge of taxpayers and the difficulty of convincing taxpayers to use e-filing effectively and efficiently.

US tax reform advantages the Republicans, for now

2017 ◽  
Keyword(s):  
Stock Prices ◽  
Republican Party ◽  
Financial Stability ◽  
Budget Deficit ◽  
Tax Reform ◽  
The United States ◽  
Content Type ◽  
Oil Drilling ◽  
The Us ◽  
Tax Returns

Significance The sweeping tax reform is US President Donald Trump’s first major legislative victory. Although the bill met strong opposition, and criticism from many leading economists, Trump secured support from his fellow Republican party legislators in Congress. The bill, the first major federal tax reform since 1986, passed on a partisan vote with no Democratic legislators’ support. Impacts Stock prices will rise on the tax legislation’s passage; overseas money could flow back into the United States. The new legislation accomplishes for many Trump’s goal of simplifying the annual tax returns filing process. The tax reform will increase the US budget deficit and the national debt, damaging financial stability over the medium to longer term. If the Democrats win the House or Senate in 2018, they will likely try pushing back on the tax reform. The tax reform will allow new oil drilling in Alaska and undermines parts of the ‘Obamacare’ health scheme.

PAC Contributions and Defense Contracting

2000 ◽  
Vol 2 (1) ◽  
pp. 53-73 ◽  
Author(s):  
Micky Tripathi
Keyword(s):  
Fixed Effects ◽  
Political Action ◽  
Distribution Patterns ◽  
Political Activity ◽  
Defense Budget ◽  
Defense Contractors ◽  
Defense Contracting ◽  
Least Absolute Deviations ◽  
The Us ◽  
The Face

This paper examines the political activity of US defense contractors over the years 1980–1994. Using econometric techniques to account for both fixed-effects and selection, I examine the industry determinants and distribution patterns of political action committee (PAC) contributions to the US House of Representatives. The analysis finds that the size of the defense budget is a primary factor explaining political activity across the industry as well as within individual firms; firm size, dependency on defense, and defense contract awards explain much less. I also find that firms appeared to change their political strategies in the face of large exogenous shifts in the US defense budget. While defense expenditures were on the rise, defense firms spread their contributions relatively broadly over the defense committee system; when the budget fell, however, the firms switched strategies and targeted committee leaders. An incidental contribution of the paper is an empirical application of the trimmed least absolute deviations estimator for fixed-effects models with selection.

Labor Monopsony in the United States

2021 ◽  
pp. 11-29
Author(s):  
Eric A. Posner
Keyword(s):  
United States ◽  
Economic Growth ◽  
Labor Market ◽  
Labor Markets ◽  
Market Power ◽  
Empirical Work ◽  
The United States ◽  
Market Concentration ◽  
Wide Range ◽  
Low Wages

Most labor markets are monopsonistic, meaning that employers have market power and can suppress wages below the competitive rate. Among the various sources of market power is concentration: the usually small number of employers who compete to offer a type of job to workers. At one time, economists assumed that labor markets were competitive, and largely ignored the phenomenon of labor market concentration. Recent empirical work, relying on newly available databases, has established that labor market concentration is a serious problem in the United States and may account for a wide range of pathologies, including low wages, inequality, and stagnant economic growth.

scholarly journals Equity: The Effects Of Tax Reform On Progressivity Features Of The Tax Structure

2011 ◽  
Vol 7 (4) ◽  
pp. 9
Author(s):  
Julia K. Brazelton ◽  
Caroline D. Strobel ◽  
David Ryan
Keyword(s):  
Statistical Analysis ◽  
Tax Reform ◽  
Policy Decision ◽  
Tax Rates ◽  
Effective Tax Rates ◽  
Income Levels ◽  
Taxable Income ◽  
Graphic Analysis ◽  
Tax Returns ◽  
The Impact

The impact of the Tax Reform Act of 1986 (TRA86) on equity is examined using a simulation program and statistical analysis. Specifically, a sample of tax returns was manipulated to calculate taxable income for 1987 and 1988. The results were then compared to determine the degree to which effective and average tax rates changed within discrete income levels. Using both t-test and z statistics, the results confirm the hypothesis that the degree of progressivity has been affected by TRA86. A graphic analysis illustrates this change at various income levels for both the average and effective tax rates. These findings are significant for tax policy decision purposes.

A Marketing Approach for Measuring Product Market Differentiation and Concentration in Antitrust Cases

1992 ◽  
Vol 11 (2) ◽  
pp. 90-100 ◽  
Author(s):  
George R. Milne
Keyword(s):  
Market Power ◽  
Product Differentiation ◽  
Empirical Work ◽  
Product Market ◽  
Marketing Theory ◽  
Department Of Justice ◽  
Market Structure Analysis ◽  
Consumer Markets ◽  
Antitrust Analysis ◽  
Marketing Approach

Product differentiation is a reality in today's consumer markets and warrants further study in antitrust analysis because product differentiation increases market power. Currently the FTC and Department of Justice rely on the Herfindahl-Hirschman index (HHI) to detect market power. However, the HHI is not sensitive to product market differentiation. The author uses marketing tools of market structure analysis to propose a new measure of concentration, the market concentration index (MCI), that reflects product market differentiation. The rationale for the new measure is based on marketing theory, antitrust court opinion, and the antitrust economics literature. MCI is compared with HHI and is shown to have several practical and theoretical advantages. The 1986 proposed mergers in the carbonated soda market are analyzed by means of both measures. The empirical work demonstrates MCI's ability for detecting changes in product market differentiation.

A Case for Company-Specific Public Disclosure of Corporate Tax Returns

2015 ◽  
Vol 15 (1) ◽  
pp. 1-21 ◽  
Author(s):  
Donald Morris
Keyword(s):  
Tax Reform ◽  
Tax Compliance ◽  
Public Disclosure ◽  
Corporate Tax ◽  
Public And Private ◽  
Public Companies ◽  
The Public ◽  
Fiduciary Responsibility ◽  
Tax Returns ◽  
Private Corporations

ABSTRACT Tax returns of both public and private corporations are protected from IRS disclosure by Internal Revenue Code §6103. Historically, most arguments against public disclosure of tax information were aimed at personal returns. This article evaluates arguments both opposing and favoring company-specific public disclosure of corporate tax returns, focusing on public companies and federal government contractors. Among reasons against disclosure are the fear that (1) it will add to, rather than reduce, confusion about corporate accounting and tax practices, (2) compliance will be reduced as companies seek to hide details of their revenue and expenses, and (3) proprietary information, including trade secrets, will be disclosed. Among reasons favoring disclosure are the (1) results of a national survey, (2) improvement of tax compliance, (3) limited value of privacy given that it does not cover disagreements with the IRS that wind up in court, (4) fiduciary responsibility corporations owe to the public, and (5) tendency of increased transparency to intensify public pressure for tax reform. Based on this analysis, it is argued that the benefits to be gained by increasing disclosure—especially encouraging tax reform—outweigh the objections raised, which either lack empirical basis or may be met with available remedies.

Effects of Environmental Threat on U.S. Defense Contractors in War Zones from the Social Science and Technology Perspectives

2015 ◽  
pp. 6494-6502
Author(s):  
Jeffrey T. Fowler ◽  
Ruth Sharf
Keyword(s):  
Social Science ◽  
Social Science Research ◽  
Science Research ◽  
Defense Contractors ◽  
Defense Contracting ◽  
Asymmetric Warfare ◽  
Environmental Threat ◽  
Technological Advantage ◽  
Physical Threat ◽  
War Zones

The following article will explore environmental threat as it applies to contractor personnel in combat zones from both the technological and scientific perspectives. A unique aspect of defense contracting is the performance of contracts in war zones, such as Afghanistan. Asymmetric warfare, lacking conventional front lines, dictates that contractors encounter physical threat at any time and in a variety of circumstances. Under these conditions, contracting assumes a new dimension associated with a heightened level of physical environmental threat and the mitigating effects inherent in technological advantage. In addition, social science research into morale factors is an important element in contractor performance. It is interesting to note that the West has been unable to destroy the fundamentalist forces arrayed against it despite remarkable and rapid technological and scientific advances and their application in the theater of war.

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