Equivalence of taxes and subsidies in the control of production externalities

Article Abstract:

The equivalence between positive and negative incentives in achieving economic policy objectives is examined by analyzing the interchangeability of subsidies and taxes in controlling negative production externalities. A comparison is made between unit taxes and subsidies comprised of unit and standard lump-sum amounts to determine whether a given tax regime can generate measures of key policy objectives similar to those obtained from the subsidy regime. The three measures of policy objectives considered are total output, total damage from negative externalities and social welfare. Findings show that the positive incentive of subsidies and the negative incentive of taxes can both be used to achieve a pair of policy objectives under reasonable conditions.

Analysis, Subsidies, Public policy (Law)

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S corps and taxes

Article Abstract:

Congressional measures are taking away one of the advantages that S corporations enjoy. Recent regulations have increased effective rates from the initial rate of 28% to the current 34% or more. This makes the S corps rate even higher than the regular corporation's 34% tax rate. Current House and Senate proposals on the issue go even higher, with the Senate version setting the top rate at 36% or higher for a joint tax return gross income of $175,000.

Evaluation, Tax planning, Small business, S corporations

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