Full Cups, Full Coffers: Tax Strategies and Consumer Culture in the Early Modern German Cities

During the sixteenth and seventeenth centuries, the excise taxes (Ungeld) paid by town residents on the consumption of beer, wine, mead and brandy represented the single most important source of civic revenue for many German cities. In a crisis, these taxes could spike to 70–80% of civic income. This paper examines civic budgets and ‘behind-the-scenes’ deliberations in a sample of towns in southern Germany in order to illuminate how decisions affecting consumer taxes were made. Even during the sobriety movements of the Reformation and post-Reformation period, tax income from drinkers remained attractive to city leaders because the bulk of the excise tax burden could easily be shifted away from privileged members of society and placed on the population at large. At the same time, governments had to maintain a careful balance between what they needed in order to govern and what the consumer market could bear, for high taxes on drinks were also targeted in many popular revolts. This led to nimble politicking by those responsible for tax decisions. Drink taxes were introduced, raised, lowered and otherwise manipulated based not only on shifting fashions and tastes but also on the degree of economic stress faced by the community. Where civic rulers were successful in striking the right balance, the rewards were considerable. The income from drink sales was a major factor in how the cities of the Empire survived the wars and other crises of the early modern period without going into so much debt that they lost their independence.

A Natural Gas Severance Tax-An Economic Analysis

This study estimates the economic effects of a severance tax on the market for natural gas produced from shale sources using non-conventional extraction methods, such as horizontal drilling and fracking. Results suggest that a severance tax of 5% would increase the price of natural gas by as much as 3.82% and decrease gas extraction by an estimated 1.16% to a value of 9.52%. If applied to the Commonwealth of Pennsylvania in the United States, a 5% severance tax is estimated to raise between US$443 and $486 million per year in public revenue. The marginal deadweight loss associated with a 5% severance tax is estimated between 1.27% and 12.85% of the last dollar earned. The burden of this tax falls on both producers and consumers and depends upon the underlying assumptions made regarding the price responsiveness of consumers and producers. Under plausible assumptions, a family consuming 1000 MMcfs (approximate to 2.8 x 10(4) m(3)) per year of natural gas is estimated to pay an additional $100 per year after the implementation of a 5% severance tax.

Past is Prologue: Montana’s Historic Women’s Movement Re-emerges in the Progressive 1970s -- Dorothy Bradley, Marilyn Wessel & Jane Jelinski “In the Crucible of Change”

One-hundred years ago, in 1914, male voters in Montana (MT) extended suffrage (voting rights) to women six years before the 19th Amendment to the US Constitution was ratified and provided that right to women in all states. The long struggle for women’s suffrage was energized in the progressive era and Jeanette Rankin of Missoula emerged as a leader of the campaign; in 1912 both major MT political party platforms supported women suffrage. In the 1914 election, 41,000 male voters supported woman suffrage while nearly 38,000 opposed it. MT was not only ahead of the curve on women suffrage, but just two years later in 1916 elected Jeanette Rankin as the first woman ever elected to the United States Congress. Rankin became a national leader for women's equality. In her commitment to equality, she opposed US entry into World War I, partially because she said she could not support men being made to go to war if women were not allowed to serve alongside them. During MT’s initial progressive era, women in MT not only pursued equality for themselves (the MT Legislature passed an equal pay act in 1919), but pursued other social improvements, such as temperance/prohibition. Well-known national women leaders such as Carrie Nation and others found a welcome in MT during the period. Women's role in the trade union movement was evidenced in MT by the creation of the Women's Protective Union in Butte, the first union in America dedicated solely to women workers. But Rankin’s defeat following her vote against World War I was used as a way for opponents to advocate a conservative, traditionalist perspective on women's rights in MT. Just as we then entered a period in MT where the “copper collar” was tightened around MT economically and politically by the Anaconda Company and its allies, we also found a different kind of conservative, traditionalist collar tightened around the necks of MT women. The recognition of women's role during World War II, represented by “Rosie the Riveter,” made it more difficult for that conservative, traditionalist approach to be forever maintained. In addition, women's role in MT agriculture – family farms and ranches -- spoke strongly to the concept of equality, as farm wives were clearly active partners in the agricultural enterprises. But rural MT was, by and large, the bastion of conservative values relative to the position of women in society. As the period of “In the Crucible of Change” began, the 1965 MT Legislature included only three women. In 1967 and 1969 only one woman legislator served. In 1971 the number went up to two, including one of our guests, Dorothy Bradley. It was only after the Constitutional Convention, which featured 19 women delegates, that the barrier was broken. The 1973 Legislature saw 9 women elected. The 1975 and 1977 sessions had 14 women legislators; 15 were elected for the 1979 session. At that time progressive women and men in the Legislature helped implement the equality provisions of the new MT Constitution, ratified the federal Equal Rights Amendment in 1974, and held back national and local conservatives forces which sought in later Legislatures to repeal that ratification. As with the national movement at the time, MT women sought and often succeeded in adopting legal mechanisms that protected women’s equality, while full equality in the external world remained (and remains) a treasured objective. The story of the re-emergence of Montana’s women’s movement in the 1970s is discussed in this chapter by three very successful and prominent women who were directly involved in the effort: Dorothy Bradley, Marilyn Wessel, and Jane Jelinski. Their recollections of the political, sociological and cultural path Montana women pursued in the 1970s and the challenges and opposition they faced provide an insider’s perspective of the battle for equality for women under the Big Sky “In the Crucible of Change.” Dorothy Bradley grew up in Bozeman, Montana; received her Bachelor of Arts Phi Beta Kappa from Colorado College, Colorado Springs, in 1969 with a Distinction in Anthropology; and her Juris Doctor from American University in Washington, D.C., in 1983. In 1970, at the age of 22, following the first Earth Day and running on an environmental platform, Ms. Bradley won a seat in the 1971 Montana House of Representatives where she served as the youngest member and only woman. Bradley established a record of achievement on environmental & progressive legislation for four terms, before giving up the seat to run a strong second to Pat Williams for the Democratic nomination for an open seat in Montana’s Western Congressional District. After becoming an attorney and an expert on water law, she returned to the Legislature for 4 more terms in the mid-to-late 1980s. Serving a total of eight terms, Dorothy was known for her leadership on natural resources, tax reform, economic development, and other difficult issues during which time she gained recognition for her consensus-building approach. Campaigning by riding her horse across the state, Dorothy was the Democratic nominee for Governor in 1992, losing the race by less than a percentage point. In 1993 she briefly taught at a small rural school next to the Northern Cheyenne Indian Reservation. She was then hired as the Director of the Montana University System Water Center, an education and research arm of Montana State University. From 2000 - 2008 she served as the first Gallatin County Court Administrator with the task of collaboratively redesigning the criminal justice system. She currently serves on One Montana’s Board, is a National Advisor for the American Prairie Foundation, and is on NorthWestern Energy’s Board of Directors. Dorothy was recognized with an Honorary Doctorate from her alma mater, Colorado College, was named Business Woman of the Year by the Bozeman Chamber of Commerce and MSU Alumni Association, and was Montana Business and Professional Women’s Montana Woman of Achievement. Marilyn Wessel was born in Iowa, lived and worked in Los Angeles, California, and Washington, D.C. before moving to Bozeman in 1972. She has an undergraduate degree in journalism from Iowa State University, graduate degree in public administration from Montana State University, certification from the Harvard University Institute for Education Management, and served a senior internship with the U.S. Congress, Montana delegation. In Montana Marilyn has served in a number of professional positions, including part-time editor for the Montana Cooperative Extension Service, News Director for KBMN Radio, Special Assistant to the President and Director of Communications at Montana State University, Director of University Relations at Montana State University and Dean and Director of the Museum of the Rockies at MSU. Marilyn retired from MSU as Dean Emeritus in 2003. Her past Board Service includes Montana State Merit System Council, Montana Ambassadors, Vigilante Theater Company, Montana State Commission on Practice, Museum of the Rockies, Helena Branch of the Ninth District Federal Reserve Bank, Burton K. Wheeler Center for Public Policy, Bozeman Chamber of Commerce, and Friends of KUSM Public Television. Marilyn’s past publications and productions include several articles on communications and public administration issues as well as research, script preparation and presentation of several radio documentaries and several public television programs. She is co-author of one book, 4-H An American Idea: A History of 4-H. Marilyn’s other past volunteer activities and organizations include Business and Professional Women, Women's Political Caucus, League of Women Voters, and numerous political campaigns. She is currently engaged professionally in museum-related consulting and part-time teaching at Montana State University as well as serving on the Editorial Board of the Bozeman Daily Chronicle and a member of Pilgrim Congregational Church and Family Promise. Marilyn and her husband Tom, a retired MSU professor, live in Bozeman. She enjoys time with her children and grandchildren, hiking, golf, Italian studies, cooking, gardening and travel. Jane Jelinski is a Wisconsin native, with a BA from Fontbonne College in St. Louis, MO who taught fifth and seventh grades prior to moving to Bozeman in 1973. A stay-at-home mom with a five year old daughter and an infant son, she was promptly recruited by the Gallatin Women’s Political Caucus to conduct a study of Sex-Role Stereotyping in K Through 6 Reading Text Books in the Bozeman School District. Sociologist Dr. Louise Hale designed the study and did the statistical analysis and Jane read all the texts, entered the data and wrote the report. It was widely disseminated across Montana and received attention of the press. Her next venture into community activism was to lead the successful effort to downzone her neighborhood which was under threat of encroaching business development. Today the neighborhood enjoys the protections of a Historic Preservation District. During this time she earned her MPA from Montana State University. Subsequently Jane founded the Gallatin Advocacy Program for Developmentally Disabled Adults in 1978 and served as its Executive Director until her appointment to the Gallatin County Commission in 1984, a controversial appointment which she chronicled in the Fall issue of the Gallatin History Museum Quarterly. Copies of the issue can be ordered through: http://gallatinhistorymuseum.org/the-museum-bookstore/shop/. Jane was re-elected three times as County Commissioner, serving fourteen years. She was active in the Montana Association of Counties (MACO) and was elected its President in 1994. She was also active in the National Association of Counties, serving on numerous policy committees. In 1998 Jane resigned from the County Commission 6 months before the end of her final term to accept the position of Assistant Director of MACO, from where she lobbied for counties, provided training and research for county officials, and published a monthly newsletter. In 2001 she became Director of the MSU Local Government Center where she continued to provide training and research for county and municipal officials across MT. There she initiated the Montana Mayors Academy in partnership with MMIA. She taught State and Local Government, Montana Politics and Public Administration in the MSU Political Science Department before retiring in 2008. Jane has been married to Jack for 46 years, has two grown children and three grandchildren.

Investment Valuation with Tax-optimized Financing Decisions and a Tax-optimized Default Alternative

In this paper we evaluate an indivisible investment project that is carried out in a corporation under very simple premises. In particular, we discuss a one-period model with certainty, the pure domestic case and proportional tax rates. Surprisingly, the decision problem turns out to be rather complex if one has to make allowance for different taxation of the corporation and its owner. Altogether there are more than 10 cases that have to be distinguished if the firm's managers want to make a correct decision, depending on the relation of personal and corporate tax rates.

A Simple Accounting-based Valuation Model for the Debt Tax Shield

This paper describes a simple way to integrate the debt tax shield into an accounting-based valuation model. The market value of equity is determined by forecasting residual operating income, which is calculated by charging operating income for the operating assets at a required return that accounts for the tax benefit that comes from borrowing to raise cash for the operations. The model assumes that the firm maintains a deterministic financial leverage ratio, which tends to converge quickly to typical steady-state levels over time. From a practical point of view, this characteristic is of particular help, because it allows a continuing value calculation at the end of a short forecast period.

Endangering of Businesses by the German Inheritance Tax? – An Empirical Analysis

This contribution addresses the substantial tax privilege for businesses introduced by the German Inheritance Tax Act 2009. Advocates of the vast or even entire tax exemption for businesses stress the potential damage of the inheritance tax on businesses, as those often lack liquidity to meet tax liability. This submission tackles this issue empirically based on data of the German Inheritance Tax Statistics and the SOEP. The results indicate that former German inheritance tax law has not endangered transferred businesses. Hence, there is no need for the tremendous tax privilege for businesses in current German inheritance tax law. An alternative flat inheritance tax without tax privileges, which meets revenue neutrality per tax class according to current tax law, provokes in some cases relative high tax loads which might trouble businesses.

Tax-Optimal Step-Up and Imperfect Loss Offset

In the field of mergers and acquisitions, German and international tax law allow for several opportunities to step up a firm's assets, i.e., to revaluate the assets at fair market values. When a step-up is performed the taxpayer recognizes a taxable gain, but also obtains tax benefits in the form of higher future depreciation allowances associated with stepping up the tax base of the assets. This tax-planning problem is well known in taxation literature and can also be applied to firm valuation in the presence of taxation. However, the known models usually assume a perfect loss offset. If this assumption is abandoned, the depreciation allowances may lose value as they become tax effective at a later point in time, or even never if there are not enough cash flows to be offset against. This aspect is especiallyrelevant if future cash flows are assumed to be uncertain. This paper shows that a step-up may be disadvantageous or a firm overvalued if these aspects are not integrated into the basic calculus. Compared to the standard approach, assets should be stepped up only in a few cases and - under specific conditions - at a later point in time. Firm values may be considerably lower under imperfect loss offset.