Most analysis of the economic impacts of sales taxes does not include local taxes, despite the fact that they account for one-fifth of all sales tax collections and vary widely across states. This paper addresses that omission, estimating the effect of sales taxes on employment at state borders using county-level quarterly data and a newly developed data set of local county tax rates. The findings indicate that sales tax increases, relative to cross-border neighbors, lead to losses of employment, as well as payroll and hiring, but these effects are only found in counties with large shares of residents working in another state. The employment effects are also likely to be relatively short-lived, as they occur in the period before tax competition occurs and competitive jurisdictions are able to strategically respond and minimize cross-border tax differentials. Comparing estimates of sales tax effects with and without local county sales taxes show that omitting county taxes does not lead to meaningfully different estimates.

Introduction

State borders are commonly used to explore the impacts of taxation, as they represent both sharp differences in rates as well as heightened opportunity for responses of households and firms (Mikesell, 1970; Mikesell, 1971, Holmes, 1998; Rohlin et al., 2014). This is especially true in the case of sales taxes, where inter-state rate differentials might motivate residents to simply cross the border to shop, depriving a state of tax revenues, retail sales, and potentially jobs (Fox, 1986; Hoyt and Harden, 2005). In fact, the rate differentials between neighboring states are large in many cases, with state general sales tax rates ranging from zero (in four states) to 8.25 percent. Each of the continental states without a sales tax borders at least one other state with a rate of 6 percent or higher (Fig. 1). Furthermore, a relatively large empirical literature, recently surveyed by Leal et al. (2010), provides evidence the households are willing to shop across borders if price differences are sufficiently large. The study of the economic costs of sales taxes is complicated, however, by a number of factors. First, most studies fail to account for the existence of local county sales taxes, which are often substantial and can either offset or exacerbate actual cross-border rate differences. Thompson and Rohlin (2012), for example, finds a strong negative effect of states sales taxes on employment, but does not control for local county rates, which could bias the results.2 There is reason to think that the bias could be non-trivial, as two thirds of border counties in states with sales taxes have a local county tax, and rates range from 0.5 to 5.0 percent (in 2009). Local taxes account for one fifth of all state and local government sales tax revenue (Census, 2015). Second, sales taxes, particularly local county taxes, could be endogenously determined. Specifically, there is a concern that changes in state and county sales taxes are correlated with the health of the local economy and are therefore endogenous. The bias is ambiguous because it could be that policy makers in healthy local economies feel their areas can withstand a sales tax increase or it could be that distressed areas more likely to raise their sales taxes because of a need of tax revenue generation. Relatedly, there is a strong possibility that states, counties and cities strategically respond to their cross-border neighbors’ tax policies. This strategic response, documented in Agrawal (2015) represents another source of potential bias. Finally, it is unlikely that the most commonlyused distance measures, cross-border contiguity, and linear distance, are very good proxies for the economic costs influencing household shopping behavior.

Original issue premium (OIP) bonds are the norm in the US tax-exempt market but very rare in the taxable market. A tax subsidy helps explain this disparity. Unlike bonds issued at par or discount, the price of OIP bonds can fall and yet remain above par, providing secondary market buyers with more tax-exempt coupon and less taxable market discount gain. The subsidy for OIP bonds explains additional, previously undocumented empirical facts. In a calibration exercise, the subsidy’s expected cost to the U.S. Treasury is estimated at $1.7 billion per year.

Introduction

Tax incentives affect investors’ portfolio and trading choices, asset prices, and ultimately issuers’ financing choices. If these incentives are not the expression of optimal policies, the resulting distortions can cause inadvertent fiscal transfers, waste of real resources, and a suboptimal allocation of capital. The US municipal bond market is a unique setting to observe tax distortions. It is the world’s only sizable market for tax-exempt assets, with a total capitalization of nearly $4 trillion. The exemption of interest income attracts almost exclusively taxable investors, magnifying the effect of any remaining taxes. This paper shows an important, tax-driven municipal market peculiarity: the prevalence of bonds issued with a price above par, known as original issue premium (OIP) bonds. In 2015, 94% of all noncallable tax-exempt bonds were issued at a premium. These premiums are large: the average ten-year bond was issued at a price of 119 per 100 face value. By contrast, premium bonds are rarely offered in the taxable market. In 2015, less than 1% of corporate bonds, 17% of taxable municipal bonds, and 1% of US Treasury bonds were issued at a premium, with almost all the remainder issued near par.2 In this paper, I propose a novel explanation for this striking difference: the US tax code subsidizes premium tax-exempt bonds. I estimate this subsidy’s expected cost to the US Treasury to be about $1.7 billion per year. If a tax-exempt bond is bought and held to maturity, all investor income is tax exempt, and the bond’s issue price is inconsequential. The subsidy materializes only when bonds are sold at a loss in the secondary market. Consider the case of a bond issued at par, i.e., with an issue price equal to face value. Suppose interest rates rise and an investor buys the bond at a discount to face value. When the bond matures and the issuer pays off the full face value, the buyer realizes a gain. This gain is labeled a market discount gain and is taxed as ordinary income, regardless of whether the bond itself is taxable or tax exempt.3 Unlike par bonds, OIP tax-exempt bonds are tax efficient simply because their price can fall and yet remain above par, avoiding the market discount label and the associated tax.4 Fig. 1(a) illustrates a concrete example. At time 0 two identical investors, Alice and Bob, buy equal amounts of two identical, risk-free tax-exempt bond issues. The bonds are issued at par, i.e., with a coupon rate equal to the yield and a price equal to face value (normalized to 100). Shortly after, at time ε, yields rise and the market prices of the bonds drop to 90.

This paper proposes a conceptual framework for teaching management accounting. The framework is rooted in distinguishing organizations from markets and draws on the fast-developing field of “organizational economics.” Market clearing prices, infinitely divisible commodities, and regime of private property rights are three aspects that can theoretically characterize market transactions. This paper argues for conceptualizing the subject matter of management accounting as a response to the relative absence of these aspects of market transactions within organizations. Specifically, management accounting procedures can be classified as instruments that: coordinate the demand and supply of resources in the absence of prices; measure resource consumption given indivisibilities in the cost function; and control resource use when the ownership of assets is separated from its control. This conceptual framework not only lends intellectual coherence to the subject matter of management accounting but also permits its diverse topics to be arranged in a logically articulated manner.

Introduction

This paper proposes a conceptual framework for teaching management accounting. About twenty years ago, Vangermeersch (1997, p. 45) complained that “management accounting seems to be a free-standing phenomenon without a deep philosophical basis (that) would facilitate the teaching of cost/management accounting.” Responding to his call, there have been many attempts over the intervening years to specify frameworks for and redefinitions of management accounting. This ongoing effort to think through the foundations of management accounting is also linked to renewed attempts to professionalize the field. Section 1 of this paper surveys the relevant scholarly and professional literature to show how the proposed conceptual framework offers a meaningful contribution to it. Section 2 selectively examines the literature on “organizational economics” to draw out those aspects that can illuminate the field of management accounting. The analyses of organizations are a vibrant and growing area of economics (Gibbons & Roberts, 2013), and it is the distinction between markets and organizations that constitutes the bedrock of organizational economics. In particular, it will be argued in Section 3 that three theoretically assumed features of market exchanges—market clearing prices, infinitely divisible commodities, and private property rights—can serve to conceptually delineate markets from organizations as contrasting modes of organizing economic transactions. In Section 4, the typical toolkit of management accounting is logically derived from the foregoing dimensional analysis of organizations. Within organizations, managerial decisions, rather than prices, fundamentally influence the allocation of resources. Moreover, unlike markets, organizations are not only marked by the separation of ownership and control but also by the presence of indivisible or lumpy resources. The toolkit of management accounting can be linked to, or even more strongly, logically derived from, these features of organizations. Specifically, whereas coordination tools, as exemplified by budgets, are needed to replace the missing price mechanism, control tools such as variances, and costing tools such as activity-based costing (ABC), are necessitated by the absence within organizations of private property and divisible resources, respectively. A coherent grouping of specific topics is presented in Section 5 of this paper. It is shown that most of the topics discussed in management accounting textbooks can be classified within the proposed tripartite toolkit and a case is made for a grouping of topics whose order unfolds in an articulated manner.

Researchers have long attempted to determine the amount of rainfall needed to trigger slope failures, yet relatively little progress has been reported on the effects of climate change on landslide initiation. Indeed, some relationships between landslides and climate change have been highlighted, but sign and magnitude of this correlation remain uncertain and influenced by the spatial and temporal horizon considered. This work makes use of statistically adjusted high-resolution regional climate model simulations, to study the expected changes of landslides frequency in the eastern Esino river basin (Central Italy). Simulated rainfall was used in comparison with rainfall thresholds for landslide occurrence derived by two observation-based statistical models (1) the cumulative event rainfall–rainfall duration model, and (2) the Bayesian probabilistic model. Results show an overall increase in projected landslide occurrence over the twenty-first century. This is especially confirmed in the high-emission scenario representative concentration pathway 8.5, where according to the first model, the events above rainfall thresholds frequency shift from * 0.025 to * 0.05 in the mountainous sector of the study area. Moreover, Bayesian analysis revealed the possible occurrence of landslide-triggering rainfall with a magnitude never occurred over the historical period. Landslides frequency change signal presents also considerable seasonal patterns, with summer displaying the steepest positive trend coupled to the highest inter-model spread. The methodological chain here proposed aims at representing a flexible tool for future landslide-hazard assessment, applicable over different areas and time horizons (e.g., short-term climate projections or seasonal forecasts).

Introduction

Over the next decades, societies will face massive environmental changes potentially able to substantially alter life styles and priorities (Lenton et al. 2008). Climate change will possibly be the major driver of such changes. However, if on the one hand the scientific community unequivocally recognized over these past decades the connection between the increase in greenhouse gases (GHGs) concentration and the increase in global temperature (Bindoff et al. 2013), on the other hand, changes in the rainfall patterns as a second-order effect of the increased temperature is connoted by higher uncertainty. Such reservations concern the magnitude and frequency of extreme events, how they will scale across the globe in response to the increase in temperature (Seneviratne et al. 2012; Scoccimarro et al. 2013; Drobinski et al. 2016). Notwithstanding these uncertainties, a broad consensus prevails on the acceleration of the hydrological cycle in a warmer atmosphere (Trenberth 1999; Mariotti et al. 2002; Lorenz and DeWeaver 2007; Volosciuk et al. 2016); acceleration appears strongly affected by the local-scale morphological and orographic peculiarities. (Xoplaki et al. 2004; Walsh et al. 2014). Rainfall is a major trigger of landslides (e.g., De Vita and Reichenbach 1998; Guzzetti et al. 2007), one of the most widespread geohydrological hazards over the world, and an increase in rainfall frequency and intensity may directly affect landslides frequency and magnitude thus increasing ensuing damages and fatalities. Indeed, good progresses have been made in linking the amount of rainfall needed to trigger slope failures (e.g., Crozier 1996; Aleotti 2004; Guzzetti et al. 2007; Martinotti et al. 2017), yet the nexus between climate change and landslide initiation appears more complicated and requires further study (Dikau and Schrott 1999; McInnes et al. 2007; Crozier 2010; Coe and Godt 2012). The available literature indicates a relationship between landslides and climate change, but the sign and strength of this correlation remain uncertain and extremely influenced by the spatial and temporal horizon considered (Seneviratne et al. 2012; Gariano and Guzzetti 2016). Landslides, strictly depending on geological, geomorphological, and land cover contexts, represent a category of climate change-related impacts (Pisano et al. 2017), which understanding and management require specific considerations. Moreover, the implementation of effective landslide adaptation measures depends on the availability of plausible multi-scale information about future climate trends. Regional climate model (RCM) simulations are considered primary tools for climate impact studies focusing on rainfall and other key climate variables (Giorgi 1990; Giorgi and Mearns 1999; Giorgi et al. 2009; Hawkins and Sutton 2009; Jacob et al. 2014).