Campus to clients: comparing international tax systems in the introductory tax class.

• Author: Rupert, Timothy J.

GIVEN THE INCREASINGLY GLOBAL NAture the economy, the AICPA has included an international/global perspective among the broad business perspective competencies it considers essential for accounting professionals to develop (ATCPA, Core Competency Framework (2005)). The ATCPA explains that "individuals entering the accounting profession should be able to identify and communicate the variety of threats and opportunities of doing business in a borderless world. The accounting professional of the future must provide services to support and facilitate commerce in the global marketplace" ("Broad Business Perspective Competencies," Core Competency Framework, available at http://tinyurl.com/28jmrua).

[ILLUSTRATION OMITTED]

Further, the AICPA Model Tax Curriculum suggests that instructors could incorporate the international/global perspective from the core competencies into the learning objectives of typical introductory tax courses. However, given the limited time devoted to tax courses in most university curricula and the multitude of topics that can be covered in introductory tax courses, instructors may have difficulty devoting an entire module to international tax issues or incorporating in-depth cases dealing with international tax issues into their introductory courses.

In response to this difficulty, this column presents an assignment that requires a more modest time commitment to bring international tax issues into the introductory tax course and to raise student awareness of differences in tax systems. The assignment requires students to research parts of another country's tax system to provide tax planning advice to a client who is considering taking a job overseas.

Educational Objectives

In most introductory tax classes, instructors will spend a portion of the beginning of the course discussing different tax rate structures (i.e., progressive, proportional, regressive) and different types of taxes (e.g., income, sales, wealth transfer, payroll). The assignment described below provides a basic set of facts that instructors can use early in the course as a means to reinforce these concepts by comparing the rate structure and types of taxes used in the United States with those of another country. By examining some features of another country's tax system, students can gain an appreciation for the fact that the specific rates and income levels chosen for the income tax by a particular country (including the United States) can take a variety of different forms. Likewise, this comparison between countries can also help students realize that a government can choose among many different types of taxes.

This understanding of the possible variations of the portfolio of taxes available to a government can offer an opportunity for instructors to incorporate a discussion about the tax policy implications of these decisions. This objective fits nicely with the learning outcome articulated in the Model Tax Curriculum that students entering the profession should have the ability to "[c]omprehend the rationale for tax laws by differentiating the types of tax bases and weighing the multiple objectives tax policymakers consider when developing tax law" (Model Tax Curriculum, Preamble, p. 2).

The second educational objective of the assignment is to give students a better understanding of the role that taxes play in the decision-making process. As noted in the Model Tax Curriculum, students should have the ability to apply "analytical reasoning tools to assess how taxes affect economic decisions for all taxpaying entities (including individuals, partnerships, Subchapters C and S corporations)" (Model Tax Curriculum, Preamble, p. 2). The assignment achieves this objective by requiring students to consider both the tax and nontax factors that individual taxpayers might consider as they decide whether to take an overseas position.

The assignment also serves to fulfill some secondary objectives. Because students must write a letter to the client that summarizes their findings, the assignment can help students further develop their written communication skills and their ability to communicate the relative attractiveness of different alternatives. Finally, the assignment can also expose students to and/or reinforce the topic of foreign currency conversion.

Implementation Guidance

To achieve the educational objectives described in the preceding section, the assignment describes a...