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PurposeThis paper investigates whether China's R&D tax deduction policy triggers firms to manipulate their R&D expenditures upward.Design/methodology/approachThis paper employs the ratio of actual tax savings as a proxy for the benefits of the R&D tax deduction policy based on manually collected and systematically cross-checked data. The relationship between tax benefits and abnormal R&D spending is estimated in a sample of Chinese A-share listed companies for the period 2007–2018.FindingsThe findings suggest that tax deductions lead to positive abnormal R&D spending and that this deviation in R&D spending may be attributed to firms' upward R&D manipulation for tax avoidance. The results also indicate that this behavior is more significant for the period after the policy revision, in non-HNTEs (high and new technology enterprises), and in firms with a high ratio of R&D expenses.Research limitations/implicationsIt is difficult to establish a sophisticated and unified model to identify the specific strategy of upward R&D manipulation that firms use to obtain tax benefits.Practical implicationsManagers should take into account upward R&D manipulation when designing governance mechanisms. Policymakers in developing countries may further pursue preferential tax policies that cover every stage of innovation activities gradually; the local provincial governments need to leverage their proximity and flexibility advantages to develop a tax collection and administration system.Originality/valueThis study contributes to the understanding of the complex effect of R&D tax incentives and helps more fully illuminate firms' upward R&D manipulation behavior from the perspective of tax planning strategies, which are underexplored in previous research.

This study examines whether and how the research and development (R&D) tax deduction policies affect corporate industrial chain linkages. Using data from Chinese A-share listed companies covering 2007 to 2022, empirical research was conducted using the difference-in-differences (DID) method. The results indicate that the R&D tax deduction policy positively impacts corporate industrial chain linkages. Mechanism tests show that the policy promotes corporate industrial chain linkages by reducing internal production and external transaction costs. Heterogeneity analysis reveals that the policy’s effect on enhancing industrial chain linkages is more pronounced for large-scale, state-owned, mature, and manufacturing enterprises. This study further finds that the business environment significantly moderates the relationship between R&D tax deduction policies and corporate industrial chain linkages.

We study the effects of a tax deduction for lifelong learning, exploiting exogenous variation in the effective costs of lifelong learning due to jumps in tax bracket rates. We use a regression kink design and tax return data on the universe of Dutch taxpayers. Low-income individuals show no response, but high-income individuals are more likely to report lifelong learning expenditures (though not a higher amount) when net costs are lower. Furthermore, for high-income individuals the effect peaks at the age interval 40–45 years of age.

Celiac disease affects 1% of the North American population, with an estimated 350,000 Canadians diagnosed with this condition. The disease is triggered by the ingestion of gluten, and a lifelong, strict gluten-free diet (GFD) is the only currently available treatment. Compliance with a strict GFD is essential not only for intestinal mucosal recovery and alleviation of symptoms, but also for the prevention of complications such as anemia, osteoporotic fractures and small bowel lymphoma. However, a GFD is difficult to follow, socially inconvenient and expensive. Different approaches, such as tax reduction, cash transfer, food provision, prescription and subsidy, have been used to reduce the additional costs of the GFD to patients with celiac disease. The current review showed that the systems in place exhibit particular advantages and disadvantages in relation to promoting uptake and compliance with GFD. The tax offset system used in Canada for GFD coverage takes the form of a reimbursement of a cost previously incurred. Hence, the program does not help celiac patients meet the incremental cost of the GFD – it simply provides some future refund of that cost. An ideal balanced approach would involve subsidizing gluten-free products through controlled vouchers or direct food provision to those who most need it, independently of ‘ability or willingness to pay’. Moreover, if the cost of such a program is inhibitive, the value of the benefits could be made taxable to ensure that any patient contribution, in terms of additional taxation, is directly related to ability to pay. The limited coverage of GFD in Canada is concerning. There is an unmet need for GFD among celiac patients in Canada. More efforts are required by the Canadian medical community and the Canadian Celiac Association to act as agents in identifying ways of improving resource allocation in celiac disease.

Whenever something new emerges, the question of how existing law applies arises. Sometimes it is both easy to answer that question and the answer is consistent with the policy goals of existing law. But sometimes the answer to that question is uncertain, does not fit well with those policy goals, or reflects a mixture of these two issues. This question is particularly vexing today with respect to new assets facilitated by blockchain technology. These new assets include cryptocurrencies, non-fungible tokens (NFTs), and ownership interests in decentralized autonomous organizations (DAOs). Commentators have written about how certain laws, particularly securities law, apply to these new assets. However, there is one legal area that commentators have yet to fully address: charity law, especially the federal tax laws relating to charities. Charities and donors are increasingly involved in transactions involving these new assets, with little guidance about how this law applies to those transactions. This Article considers how existing charity law applies to these new assets and, to the extent that application is either uncertain or inconsistent with the policy goals underlying charity law, how charity law should be modified to accommodate these new assets. It concludes that existing law provides sufficiently certain answers regarding its application to these new assets and that that application is consistent with the goals underlying that law. But two areas may require further guidance or modification of existing law in the foreseeable future: first, should certain cryptocurrencies be treated as readily valued for charitable contribution tax deduction purposes if sufficiently reliable cryptocurrency exchanges emerge; and second, if charities increasingly use blockchain technology, and particularly DAO governance structures, to further their exempt purposes, when is that use consistent with exemption under federal tax law?

Malaysia introduced Monthly Tax Deduction (MTD) as final tax system so that salaried earner can be excluded from reporting their employment income. However, the system is on voluntary basis and the take-up rate is low. So, this study was undertaken to examine the issues faced by employees on the implementation of MTD as final tax system in Malaysia. This study comprises a case study on MTD implementation at two institutions which remain anonymous due to confidentiality. Data was collected from 64 responses from open ended questionnaires to employees at both institutions. The data was analysed using thematic analysis. Findings from the analysis revealed that employees‘ hesitation to such a system is more apparent. There are three main issues discovered from this study which are: lack of knowledge on MTD as final tax among employees; burden on claiming tax reliefs and the accuracy of MTD calculation; and employer‘s readiness. The findings provide evidence to the IRBM and it will provide good foundation for the IRBM to strategize on mechanisms to enhance the implementation of the scheme. For instance, the information on low readiness among employers may call for roundtable discussion between the tax authority and employers. This would help both parties to discuss possible ways to resolve the issue. Other implications and recommendations for policy makers were also discussed in this paper.

Following generous tax deductions, Japan’s income tax base is facing shrinkage; however, this trend has evolved not only due to changes to the tax system, but also due to changes in income distribution and population composition. In this study, we use household micro data from the National Survey of Family Income and Expenditure (NSFIE, 1994–2014) to explicate the state of deductions and trends in household distribution over a 20-year period while considering the contribution of each factor to changes in the tax base through decomposition. Using a microsimulation analysis, we also assess the effects of recent changes to the tax system on the tax base. Based on a long-term perspective, while the tax base has primarily been eroded due to the effects of falling incomes and an aging population, the contributions of tax system changes responding to such pressures have been limited. Including both expansion and contraction periods in the deduction system also has an effect. From a short-term perspective, changes in the tax system have had a certain impact, particularly in the 2000s, when the tax base was expanded by reducing deductions. However, this effect has eventually been offset by changes in income distribution and population composition.

In advance of the holiday and year-end giving season, this column reviews changes made by the Tax Cuts and Jobs Act (TCJA) and suggests strategies for taxpayers who receive little or no tax benefit from their charitable giving. The TCJA made three major changes to the charitable contribution deduction. First, for cash contributions, the prior-law 50% of adjusted gross income (AGI) limitation on deductible charitable contributions for the current year increased to 60 percent of AGI from 2018 through 2025. Although tax savings is not the primary reason many taxpayers make charitable contributions, changes made by the TCJA may still have an adverse effect on charitable giving. Generally, to receive a tax deduction for charitable giving, an individual must itemize deductions. From 2018 through 2025, the Tax Policy Center projects nine out of 10 individuals will claim the standard deduction, thanks to the new $12,000 standard deduction, the elimination of miscellaneous itemized deductions subject to the 2% floor, and the state and local tax deduction cap of $10,000.

The court of appeals observed that the donation agreement gives AAHP a 45-day window in which to prevent certain changes to the facade or airspace. [...]the donation was not considered to be exclusively for conservation purposes in perpetuity, and the court of appeals affirmed the tax court's denial of the deduction. Hoffman Properties II, LP v. Commissioner of Internal Revenue Sixth Circuit Court of Appeals April 14, 2020 956 F.3d 832

The donor advised fund (DAF) is changing longstanding giving norms in United States philanthropy. DAF contributions now account for around 8.4% of giving by individuals in the U.S. Over half of those contributions go to national DAF sponsors that have relationships with large commercial investment firms like Fidelity, Vanguard, and Schwab. This Article seeks to advance the understanding of the donor advised fund and to address two of the main policy questions: whether to require a mandatory distribution of funds by DAFs and their sponsoring organizations and how to respond to the increased use of DAFs for noncash charitable contributions. Part I of the Article provides a brief overview of DAFs. Part II of the Article discusses the different ways DAFs are viewed-as quasi-private foundations, public charity substitutes, or as catalysts for new charitable giving. Each view suggests a different regulatory approach. Part III focuses distinctly on the national sponsoring organization and the reason for its section 501(c)(3) status. The Article argues that as an organization that fulfills its mission by spending, it is appropriate for policymakers to require each fund to spend down contributions over a range of years. Part IV of the Article examines the solicitation by DAF-sponsoring organizations of charitable contributions of property, including privately traded stock, real estate, fine art, collectibles, and publicly traded securities. The increasing use of DAFs for noncash contributions will accentuate the problems of current law, which include a deduction for unrealized appreciation, overvaluation of contributed property, uncertain benefits to charity, equity concerns, and enforcement. Part IV argues that if Congress intends to retain the subsidy for property contributions, DAFs present an opportunity to improve and lower the cost of the subsidy both by reducing the amount of unrealized appreciation that may be deducted and by basing the amount of the deduction for property contributions on the net benefit to charity.