| Before 1997, taxation of firms was tied to their legal form. The rule determining tax form was a test based on firms' legal characteristics. In 1997, the IRS changed to an elective system, allowing firms to freely choose their tax status, regardless of whether this choice was legally meaningful. A model predicts that legal factors should no longer affect the choice of tax form. I empirically evaluate this prediction using two cross sections of firms. I find that, comparing 1998 to 1993, the effect of non-tax considerations determined businesses' tax form less, and that their impact is no longer significantly different from zero. By contrast, the effect of tax factors became larger.;Advocates of school choice policies claim that private school competition would make public schools more efficient. I evaluate the effect of private school competition on public schools' test scores in Arizona. Private schooling is treated as endogenous. I use the Arizona K-12 tax credit to build the first instrument based on religious denominations likely to donate to private schools. Also, I use measures of the population of private school students and schools as new instruments for private schooling. Moreover, I build grade-specific measures of private school competition. I find a strong positive effect of private school competition on scores in grade 4, and no significant effect on scores in grade 7.;Clarifying the relationship between corporate tax avoidance activity and the incentive to invest is particularly important because, by most accounts, corporate tax avoidance has grown in recent years and may have contributed to the prevalence of companies in tax-loss situations. Although analyses of corporate tax avoidance and the impact of taxation on investment have proceeded on separate tracks, the two issues are interrelated. Successful tax avoidance may undermine the effectiveness of tax incentives. We develop an integrated theoretical approach to the relationship between tax avoidance and the effect of taxes on business investment. We then empirically estimate the effect of an investment tax incentive known as the bonus depreciation, and find evidence that tax avoidance opportunities have mitigated its effectiveness to stimulate corporate investment. |
