Academic journal article Academy of Accounting and Financial Studies Journal

Current Tax Issues: Results from a Survey of Tax Professors

Academic journal article Academy of Accounting and Financial Studies Journal

Current Tax Issues: Results from a Survey of Tax Professors

Article excerpt

ABSTRACT

Due to the economic upheaval caused by the terrorist attacks, Congress is currently examining economic stimulus strategies in general, and tax cut issues in particular. This paper utilizes tax professors as surrogates for individuals with tax expertise that regularly write about policy problems, issues, and potential reform solutions. The impetus for this research is to gain insights from professorial opinions regarding proposals to completely eliminate the estate tax as well as savings incentive issues such as reductions in the capital gains rate.

Interestingly, the results indicate that 60 percent of tax professors are against a permanent repeal of the estate tax, and are generally ambivalent regarding a capital gains tax cut and the proposal for a deduction for net incremental savings. However, a clear consensus was formed that indicated that tax professors are generally critical of the current system's ability to promote taxpayer savings. Finally, this study provides some insights regarding the utilization of tax professors as a sample for tax research.

INTRODUCTION AND MOTIVATION

Due to the economic upheaval caused by the terrorist attacks, Congress is focusing its attention on domestic economic stimulus issues. Specifically, tax cut issues are stealing the headlines in the beltway once again. Many assert that the current federal income tax burden is excessive because it takes a greater percentage of the economy in taxes than it ever has since World War II, so any tax surplus should be partially returned to taxpayers in the form of additional tax cuts beyond those already outlined by the recent 2001 tax Act. Others counter argue that we should increase governmental spending on programs such as education, Social Security, Medicare, highways, and especially domestic law enforcement and defense given continued terrorist threats. There are a number of tax debates: one pertains to the permanent elimination of the estate tax while another, a proposal for further reduction in the capital gains rate, is more closely related to the much larger domestic savings incentive quandary. It is appropriate to critically assess these emotionally charged economic policy issues because each side of the debate is fraught with advantages and disadvantages.

The underlying purpose of this manuscript is to descriptively and empirically assess the ongoing estate tax and capital gains cut debates while also examining the more general U.S. personal savings rate issue using an opinion survey that queries tax professors on these critical topics. Accordingly, the organizational arrangement of the remainder of the paper is as follows. The study begins with a brief historical background and literature review regarding the theoretical and political arguments for the permanent elimination of the estate tax, reduction in the capital gains tax, as well as a general discussion of the plight of individual savings in the United States in general. Next, the research questions for the study are presented preceding the professorial survey sample and response rate and a discussion of why tax professors are appropriate survey subjects. The paper describes the research method for analysis, including regression models and model variable descriptions. Finally, the study provides the statistical results section immediately before the conclusion.

BACKGROUND AND LITERATURE REVIEW

Tax issues are exceedingly complex because of conflicting economic theories, public opinion, and politics. Therefore, background and literature pertaining to the following tax quandaries are discussed more fully below: (1) the issue of tax cuts in general, (2) arguments for and against permanent elimination of the estate tax, (3) the individual U.S. personal savings rate issue, and (4) the capital gains tax cut dilemma.

Tax Cuts in General: Arguments For and Against

One of the most dividing issues pertains to the behavioral response to tax cuts. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.