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This paper examines the optimal use of tax incentives relating to the Hawaii sales, use and excise tax. While many states offer exemptions to these taxes, Hawaii is the only known state that ties its excise tax credit to the depreciation method used on the state income tax return. Therefore, the purpose of this study is to use the Hawaii business tax context to illustrate the complex trade-offs and year-by-year analyses that small businesses often must employ in the presence of shifting federal tax policy that indirectly influences state tax structures because of tax coupling. Federal and Hawaii taxpayers can elect to expense depreciable property using the 179 expensing provision or to depreciate using the modified accelerated cost recovery system (MACRS). We develop a model that will help non-corporate small businesses in Hawaii determine their optimal tax cost recovery strategy: (1) Utilize Hawaii Section 179 immediate expensing on purchases of tangible personal property, or alternatively (2) Employ MACRS depreciation on these purchases combined with the Hawaii Capital Goods Excise Credit. Our modeling separately considers the possibility that the proprietor jointly makes the federal and Hawaii cost recovery decision, as well as the alternative possibility that these cost recovery decisions are made independently.

The study illustrates that the interaction of federal and state law differences exacerbated by frequent tax changes may cause significant tax compliance complexity and resulting confusion for small non-corporate business taxpayers who are generally not equipped to wrestle with such issues. From a policy perspective, states may wish to minimize complexity using coupling efforts with federal law or otherwise routinely revisit outdated state tax statutes that indirectly cause unintended tax consequences. States must be cognizant, however, that their own budget constraints may worsen if they fully couple with recent generous federal Section 179 expensing limits.

We conduct an experiment asking participants to choose to purchase either a traditional or hybrid car to examine how federal-state conformity of tax incentives impacts the decisions of taxpayers. We also examine perceptions of taxpayers surrounding federal-state conformity. Consistent with theory related to the effects of information environment and using an experiment in which taxpayers are asked to evaluate tax incentives related to a purchase decision between a traditional and hybrid car, we find that conformity is a significant factor in increasing the propensity to take advantage of the tax incentive. Specifically, we find that participants with simple and conforming federal-state incentives are more likely to take advantage of the tax incentive than with complex and conforming federal-state incentives. In addition, the effects of conformity between federal and state incentives suggest that participant perceptions of the federal system were heavily influenced by the actions of the state.

The extent to which means-tested transfers, social insurance, and tax credits fill the gap between a family's private resources and the poverty threshold is a periodic barometer of the social safety net. Using data on families from the Current Population Survey I examine how the level and composition of before- and after-tax and after-transfer poverty gaps changed in response to changes in the policy and economic landscapes over the past two decades. The estimates presented here indicate not only dramatic changes in the level and sources of income maintenance programs filling the poverty gap, but also dramatic changes in which demographic groups successfully fill the gap. From the peak-to-peak business-cycle years of 1979 to 1999, the fraction of the gap left unfilled among non-elderly families in poverty has expanded by 25 percent, while the unfilled gap has increased by 50 percent among single female-headed families, families headed by non-whites, and families residing in the Northeast. In a given year the poor in the South fill considerably less of the poverty gap with cash welfare, but make up for much of the shortfall with higher payments of food stamps, SSI, and SSDI. Over time the poor in all regions of the country have substituted SSI, SSDI, and the EITC for cash welfare. Indeed, by 1999 the unfilled gap for families with related children present would be one-fifth larger without the EITC. With the exception of married-couple families, this apparent rate of replacement of disability payments and tax credits for cash welfare is less than one for one, leaving most poor families, especially non-white families and single female-headed families, financially more vulnerable today than in previous decades.

Relative to comparable industrialized countries, Germany stands out in terms of its low homeownership rate (43 percent). For Germany, it is unknown so far to what extent the low rate of homeownership can be related to housing being unaffordable. One reason for the lack of evidence is the apparent lack of data. The purpose of this paper is to fill this gap.

Based on a regional dataset of 3.9 million asking prices of housing units collected by a real estate listing engine, the paper applies internationally established affordability concepts to the German housing market. The authors then run a number of cross‐section regressions at the level of the 16 German federal states, using the affordability measures as explanatory variables of the rate of homeownership.

The results show that the average German household would have to sacrifice a large part of its non‐housing consumption to afford homeownership, especially of single‐family homes. As the regional analysis reveals, certain types of household can even be considered excluded from the ownership market in some particularly unaffordable states with cost burdens of over 50 percent, such as Bavaria. The cross‐section regression results for the 16 federal states affirm the importance of affordability as a determinant of the homeownership rate.

The official data on ownership rates are rather spotty over time and only available for a single year (2006) for the time frame that is considered for the affordability analysis (2005‐2010). Given the data limitations, the regression analysis has to be confined to a single cross section least squares regression for 2006. The authors are aware that to obtain truly convincing results, it would be necessary to capture the development of ownership rates in different localities in Germany, such as the 16 federal states, over time and to check to what extent the affordability measures can explain any of the variation in ownership rates in a panel data framework with fixed effects for federal states and time. However, the authors feel that the regression results may serve as a starting point; they are better than a set of simple correlations, even if they constitute not a conclusive causal analysis.

Any public policy initiative to raise Germany's homeownership rate will have to address the question of how to make housing more affordable. The recent elimination of homeowner subsidies is working in exactly the opposite direction.

The affordability approach used is technically not new or challenging, but it offers a basis for comparison that has been conspicuously lacking so far for the fourth largest economy of the world. By applying affordability concepts that are well accepted and in use internationally, the authors believe that they can provide at least some suggestive evidence that can further spur research into the affordability issue. While the authors do not break new methodological ground with their paper, they do provide a basis of comparison for policy discussion and for further research. Germany provides a unique environment for affordability research, due to its reunification history, observations from which may thus yield insights valuable to the international research community.

Within the new democracies of Central and Eastern Europe, radical and far‐reaching programmes of reform are taking place. Central to these are the processes of privatisation and decentralisation which require the newly‐created tiers of local government to develop their own sources of locally‐based revenue. The property tax represents what is, from an international perspective, the most important, stable source of revenue for local government. The majority of the new emerging democracies have introduced or are in the process of introducing ad valorem‐based property taxes. This paper begins by focusing on those key elements which are central to the successful implementation of such systems and then gives a brief summary of developments in two transitional countries, namely, Armenia and the Czech Republic.

This paper aims to demonstrate that operations management techniques and operations strategy can be successfully implemented to create more efficient and effective tax department functionality. The paper seeks to bridge two areas that can have a significant impact on the competitive success of any type of enterprise – not just in the short term, but on an enduring basis.

The driver for this article came from client engagements and discussions with CEOs/CFOs, vice presidents of tax, and directors of tax and operations that the author has served on engagements over recent years.

The tax department should benefit from effective implementation of management consulting and operational strategy consulting. There is an opportunity to have a huge impact on the tax function, allowing tax to play a more central role within the overall finance function.

Firms have found that implementation of some or all of these ideas into their tax function and tax processes has afforded them a way to more effectively and efficiently manage their operations and set themselves apart from other functions within an enterprise.

The paper is very creative in demonstrating a valuable connection between operations strategy, operations management, and the tax function. The author shows how tools and process improvements can be effectively applied to tax just as they are to other functions of an enterprise.

This chapter does three things. First, it estimates regional gross domestic product (GDP) for three different geographical levels in Switzerland (97 micro regions, 16 labor market basins, and 3 large regions). Second, it analyzes the evolution of regional inequality relying on a heuristic model inspired by Williamson (1965), which features an initial growth impulse in one or several core regions and subsequent diffusion. Third, it uses index number theory to decompose regional inequality into three different effects: sectoral structure, productivity, and comparative advantage.

The results can be summarized as follows: As a consequence of the existence of multiple core regions, Swiss regional inequality has been comparatively low at higher geographical levels. Spatial diffusion of economic growth occurred across different parts of the country and within different labor market regions. This resulted in a bell-shaped evolution of regional inequality at the micro regional level and convergence at higher geographical levels. In early and in late stages of the development process, productivity differentials were the main drivers of inequality, whereas economic structure was determinant between 1888 and 1941. The poorest regions suffered from comparative disadvantage, that is, they were specialized in the vary sector (agriculture), where their relative productivity was comparatively lowest.