The fine art of reducing and avoiding income taxes

Summary Only three of a multitude of tax planning techniques have been discussed herein. If nothing else, it should be gleaned that careful analysis is the order of the day when attempting to reduce one's tax burden. Before implementing any tax planning device it is recommended that you seek professional advice. As someone once said, “a little knowledge may be dangerous”. Editor's Note: Within the Context of the Paper all References to Sections are from the Internal Revenue Code of 1954 as Amended.     

The Regulation of the United Kingdom Electricity Industry: An Event Study of Price-Capping Measures

The privatization of United Kingdom utilities after 1979 established a regulatory regime based around price capping rather than return capping. This innovation was intended to provide a predictable framework that encouraged efficiency. An event methodology was used to examine stock market reaction to the main regulatory announcements affecting 12 Regional Electric Companies from flotation to 1995. The results indicate that the regulatory announcements were only a minor contributor to the persistent abnormal returns observed. The low connection between regulatory events, efficiency changes and abnormal returns at company level lead to a conclusion that the initial structural and control frameworks dominated the regulatory framework.     

Discrimination and Job Quality: the youth labour market in the 1980s

The purpose of this paper is to investigate the extent to which discrimination early in one's career can have lasting effects on job quality even after the discrimination itself disappears. The results show that for young workers in the 1980s, discrimination is a short run phenomenon, and furthermore, the effects disappear relatively quickly. This research makes two contributions to the existing empirical literature on labour market discrimination. First, we broaden the measure of discrimination beyond wages by utilizing the Duncan Index of job quality to measure differences in labour market outcomes. Second, most empirical work has been concentrated on the effects of discrimination at a point in time using cross-sectional data. We develop a dynamic model to measure changes in job quality over time as workers gain experience over their first three years in the permanent labour market. From the results found in our empirical work, we are able to analyze the long run impact of initial discrimination. In other words, our methodology allows us to examine time dependent effects that are not observed in cross-sectional studies.     

Interest rates are low but are annuities expensive?

It is often claimed that annuities are now 'expensive'. That claim is at least partly based on money illusion. Careful analysis shows that the current prices of annuities are largely the result of a decline in inflation expectations which has brought about a change in the income stream for annuities.     

Individual Investors' Perceptions Regarding the Meaning of US and UK Audit Report Terminology: 'Present Fairly in Conformity with GAAP' and 'Give a True and Fair View'

The standard unqualified audit report in the United States contains the phrase 'present fairly ... in conformity with generally accepted accounting principles' (PFGAAP), while in the United Kingdom, the corresponding phrase is 'give a true and fair view' (TFV). Despite the former phrase existing in audit reports since 1939 and the latter since 1947, there is little agreement as to what the respective phrases represent. Accordingly, this paper examined UK and US individual investors' perceptions towards various dimensions of the meanings of the phrases including whether they imply that the financial statements are not misleading and free from bias. The results indicate that a majority of both groups perceive that the UK phrase precludes misleading financial statements. A smaller percentage of both groups feel that the US terminology achieves this objective. The results are similar as to whether the respective wording implies that the financial statements are free from bias. In general, the respondents awarded a greater level of confidence to the UK 'true and fair view' than the US 'present fairly in conformity with generally accepted accounting principles.' No policy recommendation is drawn from these results, however, since there is also evidence that as long as audit report language is pre-determined by law or some official body, investors will evince indifference as to the kind of language prescribed.