Few observers doubt that such reforms are sorely needed, for several reasons. First, the long-term budgetary outlook is unsustainable. Second, the US corporate tax rate is among the highest in the OECD. Third, the current system raises relatively little revenue and large amounts of corporate income go untaxed. Finally, the system is horrendously convoluted and imposes high transaction costs.

This paper will attempt to raise some proposals for US corporate and international tax reform. It will begin by asking why we need to tax corporations at all, since the rationale for the corporate tax is important for assessing reform proposals. It will then discuss options for corporate and international tax reform, beginning with long-term options (a 10 year horizon), continuing with the medium term (2-5 years) and concluding with short-term options like the Obama proposals (1-2 years).

For one example, if the non-tort regulatory standard is already “fully optimizing,” in the sense that the regulatory standard (a) sets both an efficient floor and an efficient ceiling of conduct and (b) is fully enforced by the regulatory authority, then tort law arguably should be fully displaced in the sense that no tort remedy should be available for harms caused by such an activity. If, however, the regulatory standard is only “partially optimizing” (for example, it is only an efficient minimum or efficient floor or it is only partially enforced), then tort law continues to have an important regulatory role to play.

This framework can be used to explain such tort doctrines as negligence per se and suggests circumstances in which there should be a corollary doctrine of non-negligence per se. It also helps to explain recent federal preemption cases involving overlapping tort and regulatory standards. Finally, the framework produces insights for how tort law might efficiently be adjusted to coordinate with overlapping social norms, which are also considered within the L&E tradition to be a form of regulation.

When a federal consumption tax is considered as an addition to, and not as a replacement of, the existing income tax, it becomes clear that a lot of the discussion of consumption taxes in the preceding US debate has been misguided. Consumption tax advocates typically began by asking how the income tax should be modified to reach only consumption. As a result, consumption tax proposals centered on features that derive from the income tax, such as progressivity and entity-based taxation. The resulting proposals bore little resemblance to existing VATs around the world. They were designed in large part to look more like income taxes and therefore perhaps be more politically acceptable.

Once this central complication is abandoned, it becomes clear that the US should not reinvent the wheel. For example, most earlier consumption tax proposals were subtraction based (i.e., based on inclusions and deductions, like the income tax) rather than credit-invoice based (i.e., based on transactions). Almost all existing VATs, however, are credit-invoice based, for good reasons (explored below in Itai Grinberg’s article). Another example is that many consumption tax proposals (like David Bradford’s X-Tax and the Flat Tax) are origin based, while all VATs are destination based. This feature stems in part from the need to make a subtraction-method consumption tax WTO compatible. But as Keen and Hellerstein explain in this volume, destination based taxes are clearly superior, and once the US tax is a “normal” credit-invoice VAT, it can be destination based as well. Finally, if progressivity issues are addressed by the income tax, then the consumption tax can be applied at a single rate, like most modern VATs.

The purpose of the conference was to lay the ground for a potential future adoption of a federal VAT in the United States by discussing some of the technical issues related to two broad topics: Firstly, how should such a US federal VAT be designed, and secondly, how should it be coordinated with existing state Retail Sales Taxes (RST). The assumption underlying the conference was that, as in other OECD countries, the US federal VAT would be levied in addition to, and not as a replacement for, the existing US federal income tax.

This article summarizes the conference papers. The papers are being revised for publication, so what appears below does not necessarily represent the final views of the authors but summarizes the conference proceedings.

In what follows, I will comment on the major proposals in the Obama Plan and explain how they form a coherent step forward toward achieving the Single Tax and Benefit Principles. I will first address the proposals related to the taxation of active income earned by corporations, and then the proposals related to the taxation of passive income earned by individuals.

This comparison of tax remittance responsibility and tort remittance responsibility produces a number of positive and normative insights. For example, it helps to explain why the remittance responsibility for the retail sales tax lies primarily with the sellers rather than the buyers, as well as why we have wage withholding for the income tax. And it helps to explain some existing types of non-wage withholding, such as withholding on payments to foreign taxpayers. This framework also supports a number of reforms in the current U.S. regime for tax enforcement such as expanding the withholding requirement to payments made to independent contractors, which are a type of payment that currently contributes significantly to the overall U.S. federal tax gap.

Because the arbitration award is the product of the panel, not a single arbitrator, we also study the dynamics of panel interaction. We find that the position of chair is an important factor in assessing the arbitrator’s influence, although the financial relationships of other arbitrators may also affect arbitration awards. Coalitions with the other arbitrators are also important. If the chair and another panelist possess a common attribute, the effect on the arbitration award increases.

Finally, we provide evidence that the 1998 reforms to the arbitration process – which introduced party control over the composition of panels – ameliorated, but did not eliminate, the effect that attorneys who represent brokers have on outcomes. We find no significant effect from the NASD’s 2004 reforms.