Showing papers on "Apportionment published in 2019"

Shifting MNE taxation from national to global profits: A radical reform long overdue

Abstract: The current “Separate Accounting” taxation of corporations gives governments the right to tax the national incomes of firms operating within their borders. However, multinational and increasingly digital business models beg the question: what is national taxable income? We argue that a radical rethink of the corporate taxation – moving away from a separate taxation of national corporate income to a taxation of global corporate income allocated via “Formula Apportionment” – is long overdue. Global corporate income as a basis for taxation is supported both by recent theoretical developments and corroborating empirical evidence, with the EU and emerging economies including China already considering its adoption. Nor is it new. As we relate, formula apportionment of global corporate income was used a century ago before commercial and political interests promoted separate accounting, thereby providing both precedent and experience to inform its re-adoption.

An Assessment of Global Formula Apportionment

Abstract: Formula apportionment as a way to attribute taxable profits of multinationals across jurisdictions is receiving increased attention. This paper reviews existing literature and discusses experiences in selective federal states to evaluate the economic properties of formula apportionment relative to the current international tax regime that is based on separate accounting. It highlights major advantages, such as the elimination of profit shifting within multinational groups; and it discusses new distortions and the impact on tax competition. The analysis exploits different datasets to assess the direct revenue implications for individual countries under alternative formulas. The distributional effects across countries are found to be large, reflecting major discrepancies between where profits are currently attributed and where factors of production are located or sales take place. The largest losses appear in investment hubs (i.e. countries with a disproportionate ratio of foreign direct investment to GDP), while several large advanced countries are likely to gain. Developing countries gain most likely if employment receives a large weight in the formula; they also tend to benefit, on average, from a formula based on sales by destination.

Multiwinner approval voting: an apportionment approach

Abstract: To ameliorate ideological or partisan cleavages in councils and legislatures, we propose modifications of approval voting in order to elect multiple winners, who may be either individuals or candidates of a political party. We focus on two divisor methods of apportionment, first proposed by Jefferson and Webster, that fall within a continuum of apportionment methods. Our applications of them depreciate the approval votes of voters who have had one or more approved candidates elected and give approximately proportional representation to political parties. We compare a simple sequential rule for allocating approval votes with a computationally more complex simultaneous (nonsequential) rule that, nonetheless, is feasible for many elections. We find that our Webster apportionments tend to be more representative than ours based on Jefferson—by giving more voters at least one representative of whom they approve. But our Jefferson apportionments, with equally spaced vote thresholds that duplicate those of cumulative voting in two-party elections, are more even-handed. By enabling voters to express support for more than one candidate or party, these apportionment methods will tend to encourage coalitions across party or factional lines, thereby diminishing gridlock and promoting consensus in voting bodies.

Rethinking the D'Hondt method

Abstract: The D'Hondt method is the most popular proportional apportionment procedure, as well as one of the oldest. Despite this, the method is not fully understood, with serious normative and empirical imp...

Spatiotemporal variations and source apportionment of NO x , SO 2 , and O 3 emissions around heavily industrial locality

Abstract: The main objective of this study is to estimate the levels of pollution to which the community is presently exposed and to model the regimes of local air quality. Diurnal, daily, and monthly variations of NO, NO2, SO2, and O3 were thoroughly investigated in three areas; namely, residential, industrial, and terminal in Ras Al-Khafji. There is obvious diurnal variation in the concentration of these pollutants that clearly follows the diurnal variation of atmospheric temperature and main anthropogenic and industrial activities. Correlation analysis showed that meteorological conditions play a vital role in shaping the pattern and transportation of air pollutants and photochemical processes affecting O3 formation and destruction. Bivariate polar plots, an effective graphical tool that utilizes air pollutant concentrations’ dependence on wind speed and wind direction, were used to identify prevailing emission sources. Non-buoyant ground-level sources like domestic heating and street transport emissions, various industrial stacks, and airport-related activities were considered dominant emission sources in observatory sites. This study offers valuable and detailed information on the status of air quality, which has considerable, quantifiable, and important public health benefits.

Challenges of monitoring tax compliance by multinational firms: evidence from Chile

Abstract: This paper reviews common challenges of taxing multinational firms, using Chile as a case study. We briefly describe key international tax avoidance methods: profit shifting to low-tax jurisdictions through transfer pricing and debt shifting. We discuss the prevalent policy to tax multinationals—the arm's length principle—and alternative proposals using apportionment formulas. Novel data from Chile show that multinationals make up a large share of GDP but report lower profit and effective tax rates than local firms. In 2011, Chile implemented a reform following OECD guidelines to enforce the arm's length principle. We discuss potential effects on tax collection and welfare.

The elimination paradox: apportionment in the Democratic Party

Abstract: To award delegates in their presidential primary elections, the US Democratic Party uses Hamilton’s method of apportionment after eliminating any candidates (and their votes) that receive less than 15% of the total votes cast We illustrate how a remaining candidate may have his or her delegate total decline as a result of other candidates being eliminated; this leads to a new elimination paradox We relate that paradox to the new states, no show, and population paradoxes and show that divisor methods are not susceptible to the elimination paradox We conclude with instances in which the elimination paradox may occur in other contexts, including parliamentary systems

Characterization of some apportionment methods

Abstract: In this work known main characteristics of 11 apportionment methods are systemized, including the Hondt, Hamilton, Sainte-Laguë and Huntington-Hill methods, and some new ones are determined by computer simulation. To such characteristics, refer the disproportionality of solutions and the percentage of Quota rule violation, of the Alabama, Population and New state paradoxes occur and of favoring of beneficiaries. For a large range of initial data, where determined the preferences order of the explored apportionment methods by each of these characteristics. No one of methods is preferable by all of the six characteristics-criteria. Of the immune to the three paradoxes, d’Hondt, Huntington-Hill, Sainte-Laguë and adapted Sainte-Laguë methods, by disproportionality of solutions the best is Sainte-Laguë method, followed by the adapted Sainte-Laguë, then by the Huntington-Hill and, finally, by the d’Hondt one. The same order for these four methods is by compliance with the Quota rule. The percentage of Sainte-Laguë method’s Quota rule violation is little influenced by the total number of seats value, but it strongly decreases (over 400 times) with the increase of the number of states – from approx. 0.045% for 4 states, up to 0.0001-0.0004% for 30 states. Based on multi-aspectual comparative analyses, it is shown that from explored methods there is reasonable to use, in specific areas, only three or four: the Hamilton, Sainte-Laguë and Adapted Sainte-Laguë methods and may be the Quota linear divisor one.

Equalizing tax bases or tax revenues under tax competition? The role of formula apportionment

Abstract: This paper contributes to the literature on fiscal equalization and corporate tax competition. The innovation is that we explicitly model multinational enterprises and a corporate tax system that is designed according to formula apportionment. Two main results are obtained. First, in contrast to previous studies we identify cases where tax revenue equalization is better in mitigating detrimental tax competition than tax base equalization. Second, tax base equalization nevertheless has the advantage that it may render tax rates efficient, depending on the shape of the apportionment formula. A pure payroll formula does not ensure efficiency, but a back‐of‐the‐envelope calibration of our model to Canadian provinces suggests that a pure sales formula may be optimal.

Data Mining for Source Apportionment of Trace Elements in Water and Solid Matrix

Abstract: Trace elements migrate among different environment bodies with the natural geochemical reactions, and impacted by human industrial, agricultural, and civil activities. High load of trace elements in water, river and lake sediment, soil and air particle lead to potential to health of human being and ecological system. To control the impact on environment, source apportionment is a meaningful, and also a challenging task. Traditional methods to make source apportionment are usually based on geochemical techniques, or univariate analysis techniques. In recently years, the methods of multivariate analysis, and the related concepts data mining, machine learning, big data, are developing fast, which provide a novel route that combing the geochemical and data mining techniques together. These methods have been proved successful to deal with the source apportionment issue. In this chapter, the data mining methods used on this topic and implementations in recent years are reviewed. The basic method includes principal component analysis, factor analysis, clustering analysis, positive matrix fractionation, decision tree, Bayesian network, artificial neural network, etc. Source apportionment of trace elements in surface water, ground water, river and lake sediment, soil, air particles, dust are discussed.

Generalized Multiplicative Risk Apportionment

Abstract: This work examines apportionment of multiplicative risks by considering three dominance orderings: first-degree stochastic dominance, Rothschild and Stiglitz’s increase in risk and downside risk increase. We use the relative nth-degree risk aversion measure and decreasing relative nth-degree risk aversion to provide conditions guaranteeing the preference for “harm disaggregation” of multiplicative risks. Further, we relate our conclusions to the preference toward bivariate lotteries, which interpret correlation-aversion, cross-prudence and cross-temperance.

Expanding State Fiscal Capacity, Part I: Combining an Entity-Level Consumption Tax, Improved Sales Factor Apportionment, and a Tax on a Federal Windfall (the QBI Deduction)

Abstract: The Tax Cuts and Jobs Act (TCJA) was the most significant piece of federal tax legislation passed in thirty years. Not surprisingly, the TCJA has spurred the states to rethink their tax systems. This rethinking of state taxes was necessary even before the TCJA. To date, the states have primarily considered reforms that respond to the capping of the State and Local Tax (SALT) deduction, and the current proposals, if enacted and successful, would only return the states to where they were in 2017, which is to say to quite mediocre revenue systems. This Article, the first in a series, argues that the TCJA should provide the final motivation to move the states to reform their tax systems in fundamental ways that made sense even before the passage of the TCJA. The reform that is the focus of this Article is the implementation of entity-level consumption taxes. The states should have implemented such taxes long ago for a number of reasons. Prominent among such reasons is that the United States under-taxes the consumption tax base generally and, if well-designed, a low-rate entity-level tax is not likely to spur much additional evasion. The passage of the TCJA makes such a tax more appealing because this tax would be imposed on business entities, and businesses can still deduct state and local taxes. Thus, this proposal represents a response to the new SALT cap. Two other complementary reforms are developed. First, states should tax the windfall given to certain unincorporated businesses by the TCJA. This too can be a form of SALT workaround, as the tax on the windfall can be reduced for those taxpayers hurt by the capping of the SALT deduction. Finally, states should bolster their laws governing the apportioning of the income of multistate corporations. These laws already govern the apportionment of the state corporate income and would also control the apportionment of the tax base for the two new taxes proposed in this Article (namely, a new tax on consumption and on the federal windfall).

Seat Apportionment by Population and Contribution in European Parliament After Brexit.

Abstract: The problem of apportioning seats to member countries of the European Parliament after Brexit and in view of new accessions/exits is delicate, as countries with strong economies (and their consequent large contributions to the European Union) require that they have greater representative weight in the European Parliament. In this paper, we propose a model for seat apportionment in the European Parliament, which assigns seats taking into account both the percentages of the populations and the percentages of the contributions by each member state to the European Union budget by means of a linear combination of these two quantities. The proposed model is a modification of the approach given by Bertini, Gambarelli, and Stach in 2005. Using the new model, we studied the power position of each European Union member state before and after the exit of the United Kingdom using the Banzhaf power index. A short latest-literature review on this topic is given.

Apportioning indivisible damage and strategic diffusion of pollution abatement technology

Abstract: I examine the problem of apportioning liability among competing firms in an industry where the environmental damage is a joint product of the actions taken by all firms. In particular, I analyze the effect of alternative apportionment rules on adoption and strategic diffusion of pollution abatement technology. In a duopoly where industry wide technological diffusion is welfare enhancing, I characterize the second-best optimal apportionment rules. Inducing technology transfer requires placing a larger burden of the liability on the ex ante cleaner firm i.e., the one with a more efficient abatement technology.

An Assessment of Global Formula Apportionment

Abstract: Formula apportionment as a way to attribute taxable profits of multinationals across jurisdictions is receiving increased attention. This paper reviews existing literature and discusses experiences in selective federal states to evaluate the economic properties of formula apportionment relative to the current international tax regime that is based on separate accounting. It highlights major advantages, such as the elimination of profit shifting within multinational groups; and it discusses new distortions and the impact on tax competition. The analysis exploits different datasets to assess the direct revenue implications for individual countries under alternative formulas. The distributional effects across countries are found to be large, reflecting major discrepancies between where profits are currently attributed and where factors of production are located or sales take place. The largest losses appear in investment hubs (i.e. countries with a disproportionate ratio of foreign direct investment to GDP), while several large advanced countries are likely to gain. Developing countries gain most likely if employment receives a large weight in the formula; they also tend to benefit, on average, from a formula based on sales by destination.

Approval-Based Apportionment

Abstract: In the apportionment problem, a fixed number of seats must be distributed among parties in proportion to the number of voters supporting each party. We study a generalization of this setting, in which voters cast approval ballots over parties, such that each voter can support multiple parties. This approval-based apportionment setting generalizes traditional apportionment and is a natural restriction of approval-based multiwinner elections, where approval ballots range over individual candidates. Using techniques from both apportionment and multiwinner elections, we are able to provide representation guarantees that are currently out of reach in the general setting of multiwinner elections: First, we show that core-stable committees are guaranteed to exist and can be found in polynomial time. Second, we demonstrate that extended justified representation is compatible with committee monotonicity.

Counterpoint: A Sur-Rebuttal to Professor Jensen on the Constitutionality of an Unapportioned Wealth Tax

Abstract: The Constitution requires that direct taxes must be apportioned among the states by population. Under Hylton v. United States (1796), if apportionment is not reasonable, the tax is not direct and apportionment is not required. If the tax base per capita is equal among the states, then apportionment by population yields uniform rates across the states, which is a just rule. But wealth and real estate is not now equal per capita. Tax rates under apportionment would now have to be twice as high in Mississippi as in DC, and that is idiocy, so the taxes are not direct.

Samsung v. Apple: The Ill-Fated Introduction of Apportionment-by-Component for Designs

Abstract: In Samsung v. Apple,1 the sprawling, high-stakes dispute2 between the two titans of the smartphone industry3 finally reached the Supreme Court. For the first time in over a century, the Court faced a case involving design patents, the lesser-known brother of utility patents that protects ornamental designs rather than functional inventions.4 The Court had to decide whether Apple should have been awarded the total profits from infringing Samsung phones and tablets.5 If affirmed, these total profits, totaling over $400 million, would be awarded even though Apple’s infringed design patents only protected the phone’s front rectangular face, rounded corners, beveled screen, and graphical user interface. The Supreme Court, in a short decision, awarded a measure of relief for Samsung. The Court arrived on a textual solution that complied with the statutory language of 35 U.S.C. § 289, the special remedy for design patent infringement, but also ignored a clear, judicially recognized congressional intent against apportionment. In doing so, the Court ushered in a new

Database-based form calculation method and system

Abstract: The invention provides a database-based form calculation method, and the method comprises the steps: obtaining and storing a bill table in the database, wherein the fields of the bill table to comprise an application name, a cost item name and a cost value; storing an apportionment setting table in a database, wherein fields of the apportionment setting table comprise an application name, an apportionment setting name and an apportionment setting value; and in response to the calculation request, according to an asynchronous call mode, performing form calculations, wherein form calculations include generating and storing one or more intermediate tables in a database based on the bill table, and calculating a cost accounting table based on an apportionment setting table and the one or moreintermediate tables, wherein the fields of the cost accounting table include an application name and an apportionment cost field, and fields of the intermediate tables are set according to the apportionment cost field of the cost accounting table.

What Constitutes a Fair and Equitable Water Apportionment

Abstract: Water has been a source of conflict since time immemorial. Numerous mechanisms have been proposed for solving such conflicts but multiplicity of water uses and users along with self-serving definition of equitable, makes dispute resolution challenging. Doctrines advocating water appropriation based on the notion of equity and fairness are intuitively appealing. However, subjectivity of this concept impedes their translation to universal principles for water allocation as fairness quotient of any mechanism is determined unitedly by gamut of diverse factors. Thus, the present study critically reviews the connotations of equity and equality to arrive at a procedurally and distributionally just apportionment policy for real-world water conflicts. It seeks an equal opportunity paradigm for deservedness-based resource distribution that could be unanimously amenable to all stakeholders. The study is very apposite as there is a lurking fear of heightened water conflicts that could have bitter socio-political ramifications.

Proportional Apportionment for Connected Coalitions.

Abstract: We generalize extensively studied apportionment methods to apply them to the political districting problem. For the generalization, we prove NP-hardness and develop a mixed-integer linear program.

Fiscal Structure and Residents’ Well-Being in Korea

Abstract: Local financial expenditures have been the subject of focused inspection in Korea. There is little research devoted specifically either to the self-accountability of local governments or to a residents-oriented expenditure system. This chapter, in the context of local financial accountability, is an effort to find a way to reorganize the role apportionment for community well-being and explore it from the fiscal structure perspective.