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Internationalization of Income Measures and the U.S. Book–Tax Relationship

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  • Shaviro, Daniel

Abstract

Taxable income and financial accounting income are measures that use the same name but serve different purposes, leading to some differences in how they might ideally be defined. However, concern about managerial incentive problems may support integrating them, either to increase the accuracy of amounts reported or to reduce the resources that managers expend on reducing taxable income and increasing reported earnings. Political incentive problems, on the other hand, arguably support separating the measures, so that legislative eagerness to control the tax base need not promote politicization of accounting standards. The case for a largely one–book system may grow stronger, however, if pressures for international convergence in defining income on both the tax and accounting fronts lead to reduced politicization of both.

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  • Shaviro, Daniel, 2009. "Internationalization of Income Measures and the U.S. Book–Tax Relationship," National Tax Journal, National Tax Association;National Tax Journal, vol. 62(1), pages 155-167, March.
  • Handle: RePEc:ntj:journl:v:62:y:2009:i:1:p:155-67
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    1. Hanlon, Michelle & Laplante, Stacie Kelley & Shevlin, Terry, 2005. "Evidence for the Possible Information Loss of Conforming Book Income and Taxable Income," Journal of Law and Economics, University of Chicago Press, vol. 48(2), pages 407-442, October.
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