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The purpose of this paper is to re‐visit the problems of taxation consequences of sinking fund in the UK and to look at what is believed to be the only rational reason for using the dual rate adjusted for tax method variant.

The structure of this paper is: valuing a freehold and a leasehold interest by the single rate gross and net of tax approaches to show the logic that works with freehold valuation interest may not work with leasehold valuation; exploring the tax impacts on sinking fund; resolving the taxation issue of sinking fund; demonstrating the solution to the “double sinking fund problem” by the Greaves method and the single rate net of tax approach; and exploring the future of the dual rate theory.

The paper confirms that the traditional method is not satisfactory, even after the modifications made by the various methods mentioned above. The single rate net of tax approach is proved to meet all expectations and can be regarded as a more rational approach to the dual rate method.

Valuers of the “UK School” might consider that not only should dual rate valuation be regarded as defunct, but also that the more appropriate approach might be to move to a net of taxation approach.

This paper is the original work of the authors.

The purpose of this paper is to survey the lease vs buy coverage in leading managerial finance textbooks and to clarify the impact of tax rates and borrowing rates.

The survey uses “plain vanilla” lease vs buy scenarios to critique and clarify particular issues in the textbook presentations.

The survey finds: a lone text shows that there can be a gain from leasing if the lessee’s tax rate is higher than the lessor’s, which challenges the “conventional wisdom” maintained in all the other texts; some textbook examples attribute an overall benefit to leasing to the tax rate difference, but the benefit is actually due to a borrowing rate difference, and borrowing rate differences may be a more important source of leasing benefits than tax rate differences.

The survey provides insights that are not well known and should be useful to instructors and practitioners.

Numerous simulations are made of whether the tax system (1984 UK corporate tax) should have a neutral effect on the investment decision or whether there are incentives or disincentives to invest.

The results of this study indicate that a likely reason why a negative relation between estimated implicit taxes and pretax returns is empirically observed is the researcher’s election to choose a zero tax rate as the benchmark state and local tax rate. Normally, an observed negative relation between estimated implicit taxes and pretax returns supports the hypothesis generated by implicit tax theory. This conclusion regarding the implicit tax hypothesis may be premature whenever the incidence of state and local income taxes contributes to this empirical finding. First, state income taxes, treated as a negative subsidy when the benchmark state and local tax rate is set at zero, will likely cause implicit taxes to be underestimated. Second, the observed relationship between estimated implicit taxes and pretax returns appears to be reversible depending upon the researcher’s election of a statutory tax rate that incorporates the selected benchmark state and local tax rate.

The present study uses a sample of 848 firms covering the years from 1989 through 1998 to show how the relation between estimated implicit taxes and pretax returns can be manipulated by the selection of the benchmark state and local tax rate. Since choosing an accurate benchmark state and local tax rate can be problematic, the present study suggests adjusting both estimated implicit taxes and pretax income by the amount of state and local income taxes incurred. The results, using the regression model making this adjustment, appear to nullify the negative bias of a zero tax rate as the benchmark state and local tax rate.

In the last decade there has been considerable interest in the analysis of Trade Union behaviour, but surprisingly little discussion of the effect of tax changes on wage demands. Previous analyses have been limited by the use of simple tax structures. The discussion is extended by considering a multi‐rate tax system that can easily be applied to most countries. The effect on unions′ wage demands of eliminating the top marginal tax rate, while raising VAT, is examined in detail. It is shown that this policy can be expected to lead to an increase in the wage demands of all unions, producing a once‐and‐for‐all increase in nominal wages and unemployment.

This study investigates the impact of federal income tax rates and budget deficits on the nominal interest rate yield on high-grade municipal tax-free bonds (municipals) in the US. The 58-year study period covers the years 1959 through 2016 and thus is very recent.

The study develops a loanable funds model that allows for various financial market factors. Once developed, the model is estimated by autoregressive two-stage least squares, with a Newey-West heteroskedasticity correction.

The nominal interest rate yield on municipals is a decreasing function of the maximum marginal federal personal income tax rate and an increasing function of the federal budget deficit (expressed as a per cent of GDP). This yield is also an increasing function of nominal interest rate yields on three- and ten-year treasury notes and expected inflation.

When introducing additional interest rates such as treasury bills as explanatory variables, multi-collinearity becomes a serious problem.

This study indicates that lower maximum federal personal income tax rates and larger federal budget deficits, both act to raise borrowing costs for cities (of all sizes), counties and states across the country. Given the study period of 58 years, these relationships appear to be enduring ones that responsible policy-makers should not overlook.

Tax reform and debt management need to be conducted in a very circumspect fashion.

No recent study investigating the impact of the two key policy variables in this study has been published.

The purpose of this paper is to show an optimum income tax policy, given that the government must raise sufficient tax revenue to fund public goods and services as well as income transfer programmes. The paper examines the different types of taxes and then suggests a policy that is efficient, equitable, easy to administer and leads to a higher level of economic growth.

A literature review has been done to find all scholarly work that relates to income tax policy and its effect on economic growth. Results from endogenous growth models have been utilised to determine both the significance and the magnitude of income tax policy's effect on the growth rate of real GDP.

After examining the benefits of each type of taxation and reviewing the principles of capitalism, a proportionate (single rate) tax of 12 per cent on all income would be approximately revenue neutral in the USA, and would add to the growth of real GDP, thereby improving the standard of living.

The paper concentrates on income tax policy in the USA. While it is believed that the conclusions apply to virtually all market-based economies, cultural differences in some countries may result in a modification of the conclusion to fit the society.

In the USA today, the majority of people favour changing the current income tax code. The debate is about what to change and how to change it. This debate is also important to developing nations who try to set an income tax policy that reaches the goals while encouraging growth.

While the literature shows varying studies concerning the impact of tax policy, there is a gap when searching for an optimum policy. Many scholars have made suggestions but none of them seem to be optimal. This topic is of particular interest in the USA and the rest of the developed and non-developed world, since the recent performance of GDP growth has been very slow and in many instances negative. Most countries have tried combinations of monetary and fiscal policies to encourage growth, but none seem to be working effectively. The solution may be to change income tax policy. The proposal for an optimum income tax policy is new and different from any that has been suggested as yet.

Governments often encourage charitable giving through the tax system, by a deduction or tax credit. In 1988, Canada moved from a deduction system to a tax credit system. The tax credit for donations above $250 was calculated at the highest tax rate, even if the taxpayer was at the lowest tax rate. This gives what can be called a “superdeduction.” At the same time, the top rate of tax was reduced. Thus, the cost of giving was reduced for the lower taxpayers and increased for the higher-income taxpayers.

The article reports whether taxpayer behavior changed from 1986 (pre reform) to 1988 and 1992 (post reform). The analysis also investigates the influence of inflation on the charitable donations. The percentage of taxpayers giving over $250 was analysed for both all the taxpayers and those consistently in the low and high tax brackets. The lower-income taxpayers were found to reduce their giving, contrary to expectations. The middle-income taxpayers, in general, increased their giving, which was expected and so took advantage of the superdeduction. The results of the moderate high-income taxpayers were mixed. Taxpayers who had very high incomes decreased their giving, as was expected.

This chapter examines how public attitudes and judgments about tax fairness reflect distributive justice rules about proportionality/contributions, needs, and equality; fairness issues that influence voluntary tax compliance (Hofmann, Hoelzl, & Kirchler, 2008; Spicer & Lundstedt, 1976). Most public polls and some prior research indicate the general public considers progressive income tax rates as fairer than flat tax rates, a reflection of the Needs rule of distributive justice theory; our 1,138 participants respond similarly. However, two-thirds of our politically representative sample of the American public actually assign “fair shares” of income taxes consistently with fairness-as-proportionality above an exempt amount of income, consistent with the Contributions rule of Equity Theory. We argue experimental assignments of fair shares of income taxes can best be understood as a combination of the Needs rule, applied by exempting incomes below the poverty line from income taxation (via current standard deductions) and taxing incomes above this exempt amount at a single tax rate (i.e., a flat-rate tax) consistent with the Proportionality/Contributions rule. Viewed in combination, these two distributive justice rules explain the tax fairness judgments of 89% of our sample and indicate surprising general agreement about what constitutes a fair share of income taxes that should be paid by US citizens from the 5th percentile to the 95th percentile of the income distribution. The joint application of these fairness rules indicates how seemingly competing, partisan distributive justice concerns can inform our understanding of social attitudes about tax fairness across income classes.

The distributional impacts of replacing an income tax that has graduated marginal rates by a flat tax are complex. Typically the flat tax rate will be less than the top marginal rate under the pre-existing tax, leading to gains for the wealthiest. On the other hand, real-world proposals generally combine this with increases in personal exemptions that benefit some of the lowest income taxpayers. The result is that flat tax proposals usually redistribute from the middle to the extremes.