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Of the many things we do not know about a national, broad-based consumption tax, this article addresses only one of the important uncertainties: the impact of a consumption tax on the overall intricacy of the federal revenue system. More specifically, this article examines some important issues regarding the effects on tax system complexity of the three principal candidates for a national consumption tax-the European-style, credit method value added tax (VAT), the subtraction method VAT, and the consumed income tax.Under a credit method VAT, a business subtracts the VAT paid on its purchases (including capital expenditures) from the VAT it collects on sales and either remits to the government the tax collected in excess of tax paid or receives from the government a refund of tax paid in excess of tax collected. This system effectively taxes each business on the value that it adds to goods and services. Under a subtraction method VAT, a business deducts business purchases, including capital outlays, from sales and pays tax on the difference. A subtraction method VAT, sometimes called a business activities tax (BAT), differs from a single-rate credit method VAT only in computation procedure, and the two taxes produce the same revenue if imposed at the same rate. Businesses are usually required to settle VAT accounts with the government more often than annually.

A cash-flow consumption tax is assessed annually on individuals. In simplified terms, the base is calculated for each taxpayer by combining the year's gross receipts and savings withdrawals and then subtracting the year's business and investment expenses and the year's additions to savings. Progressive rates are applied to the resulting sum. These computations are intended to confine the cash-flow tax burden to an individual's annual consumption and to remove nonconsumption expenses and current savings from the tax base.By contrast, the base for a theoretically correct Schanz-Haig-Simons (SHS) income tax is each individual's annual consumption plus current additions to savings. Thus current receipts which are otherwise taxable remain in the tax base, even if they are saved, and withdrawals from earlier savings are not currently taxed since they were assessed in a prior year. Stated differently, the SHS tax base has two components-current consumption and current savings (including current appreciation accruing to earlier investments)-whereas a cash-flow consumption tax has only a single component-current consumption

Copyright © 2001 by J. Clifton Fleming, Jr., Robert J. Peroni & Stephen E. Shay. All rights reserved.The ability-to-pay fairness concept is a key factor underlying the historic U.S. policy of relying principally on the income tax to finance federal government expenditures. Indeed a major justification for this reliance, as opposed to significant dependence on consumption levies, is that the income tax is a system for spreading the costs of government in a way that advances fairness by giving substantial deference to comparative ability-to-pay.Consequently, one would expect tax policy analysts to routinely examine the equity implications of international income tax rules by applying the fairness criterion with the same rigor as in the domestic context. But surprisingly, there has been relatively little discussion in the literature regarding the role of the ability-to-pay concept in analyzing international tax policy issues. This may be because the composition of international investment historically has been dominated by the direct foreign investments of multinational corporations, which pose perplexing issues in evaluating fairness concerns. Even if true, however, this is an inadequate reason to forego analysis of fairness considerations when scrutinizing the important international dimension of a modern income tax. In this article, we examine the role that fairness concerns, embedded in the abilityto-pay concept, play in justifying the U.S. policy of taxing U.S. residents on their worldwide incomes.

The U.S. government faces a well-documented long-term revenue shortage that is unlikely to be cured by government expenditure reductions. Thus, it is curious that there is currently considerable pressure for the United States to adopt some type of territorial or exemption system under which most foreign-source active business income earned by U.S. resident corporations would become substantially free of U.S. income tax.Although we are not fans of territoriality, we recognize that a significant reform of the U.S. international tax system is necessary. In other articles, we have expressed our clear preference for strengthening the U.S. worldwide taxation system by repealing the deferral privilege and instituting a per-country foreign tax credit limitation. However, if such a reform is not politically feasible, we believe that a properly designed exemption or territorial system could be an improvement over the current U.S. international tax regime, which is badly flawed for multiple reasons. In any event, there is a significant likelihood that Congress will sooner or later be considering legislation to create a U.S territorial or exemption system. Accordingly, it is important for academics and policymakers to thoughtfully discuss the structure of such a system. We hope that this article will contribute to that conversation. Our fundamental point is that because of the U.S. fiscal situation, it is particularly important that a U.S. territorial system not forgo more revenue than is necessary to achieve the system’s appropriate ends.

The purification of phosphorylated proteins in a folded state and in large enough quantity for biochemical or biophysical analysis remains a challenging task. Here, we develop a new implementation of the method of gallium immobilized metal chromatography (Ga3+-IMAC) as to permit the selective enrichment of phosphoproteins in the milligram scale and under native conditions using automated FPLC instrumentation. We apply this method to the purification of the UN2A and M1M2 components of the muscle protein titin upon being monophosphorylated in vitro by cAMP-dependent protein kinase (PKA). We found that UN2A is phosphorylated by PKA at its C-terminus in residue S9578 and M1M2 is phosphorylated in its interdomain linker sequence at position T32607. We demonstrate that the Ga3+-IMAC method is efficient, economical and suitable for implementation in automated purification pipelines for recombinant proteins. The procedure can be applied both to the selective enrichment and to the removal of phosphoproteins from biochemical samples.

The 21st Century has seen unprecedented levels of corporate tax aggressiveness and avoidance. This Article continues our exploration of second-best international tax reforms that would protect the U.S. corporate tax base and have some likelihood of adoption. In this case, we consider how a U.S. minimum tax on foreign income earned by a controlled foreign corporation should be designed to protect the United States against erosion of its corporate income tax base and to combat tax competition by low-tax intermediary countries. In the authors’ view, a minimum tax should be an interim levy that preserves the residual U.S. tax on foreign income, as distinguished from a final minimum tax that partially eliminates the U.S. residual tax. An interim minimum tax would be a significant improvement over current law and would more effectively limit incentives to seek low-taxed foreign income while ameliorating pressure to retain excess earnings abroad.To achieve the objectives of such a minimum tax, corresponding changes should be made to the U.S. corporate resident definition, the source taxation of foreign multinational corporations, and the residence taxation of U.S. portfolio investors in foreign corporations to reduce tax advantages under current law for investments in foreign corporations. These changes would reduce tax advantages for foreign parent corporate groups and thereby further protect the U.S. tax base, as well as reduce incentives for U.S. corporations to expatriate as a consequence of increased U.S. taxation of foreign income under an interim minimum tax.