Previous articleNext article FreeForum: Issues in Canadian TaxationIntroductionLaura KawanoLaura KawanoForum Editor Search for more articles by this author PDFPDF PLUSFull Text Add to favoritesDownload CitationTrack CitationsPermissionsReprints Share onFacebookTwitterLinked InRedditEmailQR Code SectionsMoreThe design and implementation of tax systems involve myriad choices, and even among countries that share many similarities, important differences can emerge. Such is the case with the United States and Canada. Despite their cultural parallels and strong economic ties, different social and economic policies in these two countries reflect distinct historical backgrounds, policy environments, and positions in the global economy. As such, cross-national comparisons of the policy experiences in Canada and the United States can offer rich insights for academics and policymakers in both.This Forum presents four papers that offer a lens into several key aspects of the Canadian tax system. The first paper by Michael Smart discusses recent tax and regulatory policies that provide exceptionally low tax rates to small Canadian corporations. He finds that the recent decline in top income shares in Canada can largely be explained by recent tax changes that encourage incorporation by high-income professionals and other business owners, with corresponding shifts away from employment income. In fact, after accounting for these shifts, the evolution of the income share going to the top percentile follows a similar pattern to the United States. The second paper by Kevin Milligan also looks at high-income earners but focuses on the evolution of the progressivity of the Canadian personal income tax system and the sensitivity of his findings to the treatment of capital gains. He documents that while average tax rates are generally higher and show steeper progressivity between the 50th and 99th percentiles under the Canadian system, the US system has greater progressivity within the top 1 percent. The third paper by Kenneth McKenzie describes the capital income tax system in Canada, with comparisons before and after the implementation of the Tax Cuts and Jobs Act of 2017. Motivated by Canada’s position as a small, open economy with mobile capital, he argues for a reform that would replace the corporate income tax with a rent-based tax and increase personal tax rates on dividends and capital gains income. The final paper by Derek Messacar turns our attention to tax benefits to families with children. Using an expansion of Canada’s former universal child care benefit (UCCB) program, he finds that the enhanced benefits did not reduce women’s labor supply. While these benefits were not directly tied to child care spending, the UCCB did increase such spending among married women, particularly those with strong initial labor force attachment.Overall, this Forum aims to show that on both sides of the border, similar policy concerns exist over increasing income equality, the effectiveness of policies to support working families, and ways to improve the efficiency of our tax systems. Broadening our understanding of the different policies adopted in Canada and the United States and their effects will hopefully provide useful lessons to all of us interested in tax policy issues. Previous articleNext article DetailsFiguresReferencesCited by National Tax Journal Volume 74, Number 2June 2021 Published for: The National Tax Association Article DOIhttps://doi.org/10.1086/714385 Views: 372 HistoryPublished online May 13, 2021 © 2021 National Tax Association. All rights reserved. Published by The University of Chicago Press on behalf of the National Tax Association.PDF download Crossref reports no articles citing this article.

Next article FreeFront MatterPDFPDF PLUS Add to favoritesDownload CitationTrack CitationsPermissionsReprints Share onFacebookTwitterLinkedInRedditEmail SectionsMoreDetailsFiguresReferencesCited by National Tax Journal Volume 74, Number 1March 2021 Published for: The National Tax Association Article DOIhttps://doi.org/10.1086/715198 Views: 120 © 2021 by National Tax Association. All rights reserved.PDF download Crossref reports no articles citing this article.

This paper considers recent domestic and international proposals to use financial statement earnings as the basis for imposing additional or minimum taxes on corporate income and to reallocate corporate profits among jurisdictions. It reviews prior research undertaken in the context of previous proposals to partially substitute financial accounts for taxable income and considers how valid critiques of prior proposals are with respect to current initiatives. It concludes by noting that the concerns raised about earlier proposals have neither been fully considered nor addressed in the recent initiatives.

This paper estimates the effective tax rate on entrepreneurial income, defined as the return to an individual who starts a successful new business and then sells their interest once it becomes an established enterprise. The rate depends on both the tax imposed on the appreciation of the firm’s value during its growth phase and on the effects of the tax system on the value of equity in ongoing business enterprises. Under reasonable assumptions, this rate is lower than the rate the entrepreneur would pay on ordinary income. Preferential taxation of entrepreneurial income has consequences for both economic growth and income distribution.

In July 2020, COVID-19 had been suppressed in Australia but continued to spread across the United States. Both countries instituted lock-downs and fiscal support, but Australia experienced a milder recession, highlighting the role of public health measures in protecting the economy. Cash stimulus is less useful than in a normal recession, justifying wage subsidies encouraging businesses to retain workers. The Australian wage subsidy, delivered via the tax authority, was better targeted, more generous, more accessible, but slower than the American wage subsidy delivered via banks. The experience highlights the need for investments in IRS infrastructure to better prepare for future crises.

In response to the severe economic shock induced by the COVID-19 pandemic, Congress passed the $2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act. Using data on savings, income, and expenses from the Survey of Consumer Finances, we show that cash assistance included in the CARES Act allows almost all families to cover their normal, recurring expenses in the event of long-term unemployment. In the absence of government support, nearly half of families who lose their income for six months would not be able to cover their expenses due to low levels of liquid saving and standard unemployment insurance benefits that do not fully replace income.

In this paper, we explore the cyclicality of the U.S. safety net over the 2000s through the economic peak in February 2020 before the onset of the COVID-19 crisis. We compare the effects of means-tested programs with those of social insurance programs, separately and combined. We find, on a per capita basis, Unemployment Insurance (UI) is by far the most cyclical, particularly when fully funded federal extensions are included. A 1-percentage-point increase in the unemployment rate leads to a 17 percent increase in monthly real UI spending. Overall, the social insurance programs provide an additional $31 (2019$) in per capita real spending for each percentage point increase in the annual unemployment rate, while the means-tested programs provide a statistically insignificant $8.50 per capita for each percentage point increase in unemployment. The means-tested programs without SSI provide a significant $12 for each percentage point increase in the unemployment rate. Thus, the parts of the means-tested safety net that can respond quickly are also providing modest countercyclical stabilization. We conclude by speculating what this means for the current response to COVID-19.

We investigate the tax implications of the new recreational marijuana industry in the United States, which reached $9 billion in 2017. We exploit administrative data from Washington State to evalua...

The Green New Deal is best understood as an ambitious mobilization of the economic and environmental resources of the country to achieve the twin targets of net-zero greenhouse gas emissions and a more equal and fair society where workers have access to decent paying jobs with benefits, healthcare, housing, and economic security. The challenge with the Green New Deal is to address climate and inequality issues together and to finance solutions in a practical and effective manner. This paper presents tax reform solutions to address two of the central pillars of the Green New Deal — reducing greenhouse gas emissions and improving the economic situation of low-income households. Using a carbon tax as a central mechanism for achieving these goals, this paper presents a review of the existing literature on the impacts of a carbon tax. It then builds upon this idea by using a micro-simulation tax model to estimate the costs and distributional impacts of several other tax reforms. Ultimately, the paper presents two hypothetical reform proposals that implement a carbon tax, additional revenue raisers, and other targeted low-income tax reforms, such as changes to the earned income tax credit (EITC) and child tax credit (CTC), to create revenue-neutral solutions to reduce greenhouse gas emissions and raise the average after-tax income of the bottom quintile.