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GOOD TAX ANALYSTS PIECE - AND YOU CAN'T SEE IT

July 05, 2006

Tax Analysts has a great daily tax publication. For those of us in the tax field, it's a gold-mine of news and great commentary. But unless you are willing to fork over four figures for a subscription, you'll never see it. That means it's unavailable to most non-professionals, and to professionals who happen to be less generous with their subscriber dollars.

Today's issue features an excellent discussion of international tax competitiveness issues by contributor Martin Sullivan, including this notable comment:

It's no longer the case that credits and faster depreciation are the big draw for corporate investment. These days lower corporate tax rates have far more appeal. There are several reasons why.

First, as economies have moved away from manufacturing -- as intangible assets become more important than plant and equipment and the rate of profitability per dollar of physical capital increases -- it's a straightforward matter of arithmetic that rates play a larger role than conventional incentives in determining the after-tax profit of investment decisions.

Second, as transportation and communication costs have dropped, and trade barriers and currency controls have also declined, there's more cross-border investment than ever. In the old days, say, before 1995, economists were thinking about how to use taxes to get a domestic firm to boost its domestic investment on the margin -- for example, by 3 percent or 4 percent. In that case -- that is, in the case of investment of borderline profitability -- traditional incentives can mean a lot.

But with increased capital mobility, economists have changed their thinking about the mechanics of motivating investment. Under the new paradigm, governments try to influence location decisions of multinationals. Because those decisions involve large chunks of investment -- not just those that are marginally profitable -- tax rates matter more than tax credits.

It's an observation that can apply to state taxes just as well - the age of incentives is over (not that they ever really worked well at all), and Iowa, with it's "Values Fund" and its highest-in-the-nation tax rate, is out of step.

SHINE YOUR LIGHT, TAX ANALYSTS

Unfortunately, these observations are muffled because Tax Analysts hides them behind its subscriber firewall. Tax Analysts is actually a tax-exempt organization with an educational mission:

Tax Analysts is a nonprofit, nonpartisan organization fostering informed debate on federal, state, and international tax policy. We seek to encourage the development of tax systems that are fair, simple, and economically efficient. We challenge lawmakers, policymakers, and administrators to take into account the rights and concerns of all taxpayers, not just special interests.

It seems that hiding all of its best commentary behind the subscriber firewalls doesn't do much to foster informed debate. Considering the price of a subscription, the only people who are likely to read these things are the "special interests" themselves. Tax Analysts used to have an arrangement with the TaxProf Blog to allow an article out from behind the firewall each day, but that's over. The CCH Center for Tax Studies blog apparently is allowed to reproduce the odd news piece, but that doesn't help Mr. Sullivan get to a broader audience.

Tax Analysts would be wise to renew the arrangement with the TaxProf Blog so that their excellent commentators can get more attention. They also should set up a group blog - outside the subscriber walls - for their commentators and others to volley tax ideas in a less-formal forum.

Link: Subscriber-only version of the Sullivan piece.

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