Dania V. Francis of University of Massachusetts Boston reviews “The Black Tax: 150 Years of Theft, Exploitation, and Dispossession in America” by Andrew W. Kahrl. The Econlit abstract of this book begins: “Discusses the history of racialized tax structures and the predatory practices that flourished within them in the United States, tracing these structures and practices from the Reconstruction through the first two decades of the twenty-first century.”

This paper examines the effects on social welfare of changes in coverage levels within deposit insurance schemes. It utilizes a solid theoretical framework and takes advantage of a quasi-natural experiment and bank-level data to measure the impact of an increase in Colombia’s deposit insurance coverage level. For the case studied, the benefits outweigh the costs, resulting in a positive net impact on welfare. However, some banks concentrate most of the gains. The size of a bank, its probability of default, and the change in the percentage of insured deposits that occurred due to the increase in the coverage level are critical. Two extensions of the main model are also analyzed. The first allows banks to be bailed out because of “too-big-to-fail” considerations, and the second incorporates banks’ reaction to the increase in the coverage level. The benefits of increasing the coverage level remain positive in both cases but are lower than using the main model.

We introduce the idea of cross‐regulatory disclosure avoidance, whereby firms attempt to counteract expansions of disclosure under one regulation through actions that reduce disclosure under a different one. We study whether firms redact information from material contracts when they face new rules to disclose segment information. Using SFAS No. 131 as a plausibly exogenous shock to segment disclosure, we find that firms increasing the number of reported segments after the rule change exhibit a greater increase in redaction than firms maintaining the same number of segments. Consistent with proprietary cost motives, the increases are concentrated among firms with greater divergence in profitability across segments, higher abnormal segment profitability, and more negative abnormal stock returns in response to the finalization of the rule. Also, treated firms that redact after the rule change have abnormally profitable segments that they previously did not disclose. Firms that observables predict would increase redaction but did not experience declines in sales growth and profit margin. We find no evidence that agency cost motives drive the increases in redaction or, more generally, nondisclosure of segment performance before SFAS No. 131.

We establish that macroprudential controls limiting capital flows can curb risks arising from foreign currency borrowing by corporates in emerging markets. Firm-level data show that Indian firms tend to issue more foreign currency debt when the interest rate differential between India and the U.S. is higher. This “carry trade” relationship, however, breaks down once regulators institute more stringent interest rate caps on borrowing; in response, riskier borrowers cut issuance most. Prior to adoption of this macroprudential measure, stock price exposure of issuers to currency risk rises after issuance, as witnessed during the “taper tantrum” episode of 2013; this source of vulnerability is nullified by the measure, as confirmed during the October 2018 oil price shock and the COVID-19 outbreak. We find no evidence of the policy’s efficacy being undermined by leakage or regulatory arbitrage.

Using a regime change in the commercialization of university innovation in 1980 that strongly increased university incentives to patent and license discoveries, we document that an increase in the supply of commercializable innovation attracts venture capital investment to the region. The Bayh-Dole Act shifted ownership of intellectual property stemming from federally-funded research from the federal government to universities, spurring technology transfer into the local area. Because universities have different technological strengths, each local area surrounding a university experienced an increase after 1980 in commercializable innovation relevant to particular sets of industries which differed widely across university counties. Comparing industries within a county that were more versus less related to the local university's innovative strengths, we show that venture capital dollars after 1980 flowed systematically towards geographic areas and industries affected most by the sudden influx of commercializable innovation from universities. These results persist even when controlling for ex ante geographic and industry distributions of corporate patenting and prior venture financing. The findings support the notion that increased supply of commercializable innovation serves to draw private capital investment to a region.

This paper studies the effects of transitioning from a system of sales taxes to a value-added tax (VAT) on firm-level outcomes. We construct a dataset of product- and state-specific tax rates before and after India gradually switched from a sales tax to a VAT. Exploiting staggered state-level adoptions, we first show that following the transition, effective tax rates declined substantially and complexity as measured by various proxies generally also fell. We then show that sales increased by 57% in the medium run. The reform resulted in increased earnings for workers and higher amounts of capital and digital accounting.

We examine the optimal financing of infrastructure when governments can expropriate rents from private sector firms that manage infrastructure. While private firms need incentives to implement projects well, governments need incentives to limit expropriation. This double moral hazard limits the willingness of outside investors to fund infrastructure projects. Optimal financing contracts involve government guarantees to investors against project failure to incentivize the government to agree not to expropriate, thus improving private sector incentives and project quality. The contract also reflects several other features prevalent in infrastructure financing in practice, among which are government coinvestment, tax subsidies, and development rights.

Firm disclosures are observed by multiple audiences with diverse interests. Recognizing this practical feature, studies have examined how conflicting incentives provided by the multiple recipients of the information affect disclosure outcomes. Understandably, studies have not examined scenarios wherein disclosure incentives from recipients align in the same direction. With aligned incentives, disclosure incentives are presumably “additive.” This paper challenges such thinking. We model a firm that faces a potential entrant and a scrutinizing regulator so each individually incentivizes the firm to withhold favorable market news. However, we show that their joint presence can drastically change the disclosure equilibrium: the firm may voluntarily disclose good news seemingly in self-sabotage. Such disclosures attract entry, compelling the firm to yield its monopoly position. However, by ceding market power, the firm boosts consumer surplus and soothes regulatory concerns. The ensuing reduction in regulatory costs borne by the firm can then increase the firm’s overall value.

The Organization for Economic Cooperation and Development introduced country‐by‐country reporting (CbCR) for multinational enterprises (MNEs) to help tax authorities combat tax‐motivated income shifting. This study uses confidential U.S. tax administrative data from 2011 to 2018 to examine the effect of U.S. CbCR adoption on the tax‐motivated income shifting and real activities of U.S. MNEs. We first document that while U.S. CbCR provides the Internal Revenue Service with incremental information about the location of U.S. MNEs’ global activities relative to existing U.S. tax return disclosures, substantial overlap exists between U.S. CbCR and existing disclosures. In contrast with prior CbCR studies in cross‐country settings, we fail to find evidence of a change in U.S. MNEs’ tax‐motivated income shifting or a reallocation of real activities based on tax incentives in response to U.S. CbCR using multiple empirical approaches. Overall, our study leverages U.S. tax administrative data to provide insights into the impact of the CbCR initiative on U.S. MNEs.