The Perceived Effects of
Tax Policy on Corporate Investment Intentions
Thomas M. Porcano
Historically, Congress and various administrations
have utilized tax policies designed, in part, to influence investment
as an attempt to stimulate the economy. Many of these tax measures
can be classified as "supply-side" measures. However,
the efficacy of such policies is questionable. This article presents
the results of a mail questionnaire survey of Fortune 1000 firms.
The survey attempts to assess the impact and importance of various
tax provisions on the firms' decisions to acquire fixed assets.
The results indicate that the respondents perceive these provisions
to have a very small overall effect on stimulating their firms'
investments in fixed assets.
The Redistrubution of the Income
Tax Burden Under A true Flat Tax Structure
Charles R. Enis and Darryl L. Craig
Dissastisfaction with the present income tax system
has fostered interest in changing to one based upon comprehensive
income and a unitary rate. Many versions of such a tax have been
proposed. This article focuses on a true flat tax, eliminating
all exclusions, deductions, and credits. This system should achieve
the maximum simplicity and impose the lowest unitary rate while
raising roughly the same revenues as the current system. This
study provides a panoramic picture of the redistributional impact
of a true flat tax on all returns and families. The analysis consists
of the construction of tables and three-dimensional computer representations
contrasting the distribution of the tax burden under the current
and flat structures. The results indicate that a true flat tax
will transfer substantial taxes from the rich to the poor. Such
findings are offered as a benchmark against which alternative
tax reform proposals can be compared.
Subchapter S in Transition
Robert W. Jamison and Steven C. Dilley
This paper analyzes the rules governing cash distributions
of S Corporations after the Subchapter S Revision Act of 1982
(SSRA). Special emphasis is given to S Corporations which had
elected under Subchapter S between 1958 through 1982 and S Corporations
which have accumulated earnings and profits. These corporations
may not be faced with multiple sets of operating rules for distributing
the various layers of capital. New law governs the distributions
from the Accumulated Adjustments Account and from Accumulated
Earnings and Profits, whereas old law governs distributions of
Previously Taxed Income. Certain elections are permitted under
both laws. The authors point out the gaps and inconsistencies
in the SSRA and alert the readers to new pitfalls and planning
opportunities. Legislative and regulatory solutions are suggested.
Retirement Planning Under
Section 403(b)(7)-Advantages and Limitations
Edward J. Schnee and Charles W. Caldwell
The 1981 Economic Recovery Tax Act (ERTA) permits
employees to make contributions to an IRA even if they are already
enrolled in a retirement plan. However, eligible taxpayers should
find a tax-deferral plan made available in the Revenue Act of
1978 more attractive. The Section 403(b)(7) plans are more attractive
than IRAs because they permit larger contributions, provide broader
investment opportunities, permit easier withdrawal of funds, and
eliminate possible tax penalties. This paper initially presents
the advantages of the Section 403(b)(7) plans and then discusses
the eligibility requirements, the contribution limitations, and
the taxation of benefits received from such plans. The contribution
limitation alternatives are illustrated with examples and flowcharts.
for the CPA Examination and the Content of Undergraduate Accounting
The Board of Examiners of the AICPA recently adopted
a memorandum indicating that every CPA examination shall contain
two questions in the Accounting Practice section of the exam covering
the area of Federal income taxation. The memorandum also lists
the tax topics that may be tested on the exam. This paper presents
the results of a survey conducted to determine whether the undergraduate
accounting curricula of colleges and universities include courses
covering the tax topics listed in the memorandum. In addition,
the minimum number of tax credits or courses (if any) that each
Board of Public Accountancy requires its CPA candidates to complete
in order to qualify for the CPA examination is presented. The
results suggest that most Boards of Public Accountancy do not
require CPA candidates to complete any taxation courses and the
undergraduate accounting curricula of most of the colleges and
universities surveyed do not require, nor make available, tax
courses covering many of the tax topics that may be tested on
the CPA examination.
Tax Textbook Readability: An
Application of the Cloze Method
William A. Raabe, Kathleen C. Stevens and William
Difficulties that are encountered by students in
the first course in taxation may be traced to their difficulties
in comprehending the course's assigned text material. Using an
analysis that is accepted widely in the reading and journalism
literature, the "cloze" procedure, the authors assess
the comprehensibility of selected federal taxation textbooks,
and they discuss several implications of their analysis for accounting
students and educators, and for textbook authors and editors.
None of the selected textbooks were found to be readable by the
experimental subjects, and two of the texts were found to be less
readable than both the Internal Revenue Code and the Treasury
Regulations. This problem places undue burden upon taxation students.
Textbook authors and editors must address this readability problem,
as it has serious implications for all of tax education and practice.
Comment on "Premature
Withdrawals From Individual Retirement Accounts: A Breakeven Analysis
Richard R. Simonds
O'Neil, Saftner, and Dillaway (OSD) have calculated
the breakeven year for an IRA assuming a stream of contributions.
An example is presented which illustrates that incorrect decisions
may result if breakeven times based on the OSD procedure are followed.
An alternative procedure is developed here and a useful table
of IRA breakeven years is contructed.
Reply to "Comment on Premature
Withdrawals from Individual Retirement Accounts: A A Breakeven
Cherie J. O'Neil, Donald V. Saftner and M. Pete
Rather than incorrectly calculating the breakeven
year for IRA contributions, the O'Neil-Saftner-Dillaway (OSD)
model may be used to calculate the breakeven period for any combination
of annual contributions to either a sheltered or a nonsheltered
account. Single contribution breakeven-year tables are presented
which complement the original breakeven-year tables. When considered
with the original tables, the upper and lower parameters for breakeven
year analysis of multiple year contributions is found.