Weighing Benefits and Risks of Taxing Book Income

Posted: 19 Feb 2007

See all articles by John McClelland

John McClelland

Treasury's Office of Tax Analysis

Lillian F. Mills

University of Texas at Austin - McCombs School of Business

Abstract

This article explores the idea of taxing book income in some detail, including the history of having separate book and tax reporting systems and trends in the differences, potential benefits, costs and policy considerations, and revenue estimates for a stylized proposal. Overall, the estimated revenue does not support a rate decrease sufficient to overcome other potential costs. The article concludes by recommending that this idea receive further attention only when the long-term effects of recent changes in financial reporting and auditing standards, tax enforcement, and book-tax gap reporting are better understood.

Suggested Citation

McClelland, John and Mills, Lillian F., Weighing Benefits and Risks of Taxing Book Income. Tax Notes, Vol. 115, No. 7, February 19, 2007, Available at SSRN: https://ssrn.com/abstract=963553

John McClelland

Treasury's Office of Tax Analysis

Lillian F. Mills (Contact Author)

University of Texas at Austin - McCombs School of Business ( email )

Austin, TX 78712
United States

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