Aided by my enforced downtime (with fewer time-wasting temptations) during jury duty, I have completed a draft of a short article (under 6,000 words) entitled "Internationalization of Income Measures and the U.S. Book-Tax Relationship." It is in part a highly compressed reprise of the line of analysis here (forthcoming shortly in the Georgetown Law Journal), although it also addresses the question of how cross-border convergence in defining taxable and financial income might affect the tradeoffs I identify. I anticipate its appearing some time in 2009 in a National Tax Journal forum on book-tax differences.
A brief conclusion, which probably will also serve as the abstract, goes as follows:
"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 economic 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."
I'm not going to post it on SSRN just yet, but anyone interested in reading the current draft version can contact me off-line.