Research Reports from the Department of Operations
Document Type
Report
Publication Date
5-1-1975
Abstract
Employers in the United States are required to pay contribution to a state administered unemployment compensation fund to protect the employees in the event of unemployment. Contributions imposed by compensation laws are in reality taxes on the right to employ, and may be considered as direct costs. A corporation can often be considered as a composition of subsidiaries, each with their own accounting data. In many states including Ohio, these subsidiaries may be treated individually or in various aggregations, each aggregation becoming a subsidiary, prior to computing the contribution payment. The payment is a function of a known tax schedule and the expected payroll. The tax rate and expected payroll is a function of how the subsidiaries are aggregated. The question is to find the aggregation which minimizes the parent corporation's total tax payment. This problem can be formulated as a linear integer programming model. We present the model and computational results reflecting 1974 data from several Ohio companies.
Keywords
Corporations--Ohio, Compensation (Law)--Ohio, Compensation management--Ohio, Unemployment insurance--Law and legislation--United States, Corporations--Taxation--Law and legislation--United States, Operations research
Publication Title
Technical Memorandums from the Department of Operations, School of Management, Case Western Reserve University
Issue
Technical memorandum no. 360
Rights
This work is in the public domain and may be freely downloaded for personal or academic use
Recommended Citation
Salkin, Harvey M.; Dean, Burton V.; and Lin, Chien-Hua, "Aggregating Corporate Subsidiaries Under a Given Tax Structure" (1975). Research Reports from the Department of Operations. 8.
https://commons.case.edu/wsom-ops-reports/8