nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2007‒08‒18
four papers chosen by
Alexander Harin
Modern University for the Humanities

  1. Is a State VAT the Answer? What’s the Question? By Richard M. Bird
  2. Does graph disclosure bias reduce the cost of equity capital? By Flora Muiño Vázquez; Marco Trombetta
  3. The Evolution of Tax Morale in Modern Spain By Jorge Martinez-Vazquez; Benno Torgler
  4. Distortionary Taxation, Rule of Thumb Consumers and the Effect of Fiscal Reforms By Andrea Colciago

  1. By: Richard M. Bird (International Tax Program, Rotman School of Management, and Institute of Municipal Finance and Governance, Munk Centre for International Studies, University of Toronto, 105 St. George Street, Toronto, ON, Canada M5S 3E6,)
    Abstract: I argue in this paper that state value-added tax is more likely to be the right way to tax sales at the state level than seems to be recognized in most current US discussion. As Canadian experience demonstrates, a state VAT is both better in principle than even the best state retail sales tax (RST) and should be not much more difficult to administer in practice at the state level. A principal reason why states should consider VAT as a possible replacement for an RST is to make themselves more competitive by removing the present distorting and undesirable tax on business imposed through RSTs.
    Date: 2007
  2. By: Flora Muiño Vázquez (Universidad Carlos III de Madrid); Marco Trombetta (Universidad Carlos III de Madrid)
    Abstract: Research on disclosure and capital markets focuses primarily on the amount of information provided but pays little attention to the presentation format of this information. This paper examines the impact of graph utilization and graph quality (distortion) on the cost of equity capital, controlling for the interaction between disclosure and graph distortion. Despite the advantages of graphs in communicating information, our results show that graphutilization does not have a significant impact on users’ decisions. However we observe a significant (negative) association between graph distortion and the ex-ante cost of equity. This effect though, disappears if we use realised returns as a measure of ex-post cost of equity. Moreover, we find that disclosure and graph distortion interact so that the impact of disclosure on the cost of capital depends on graph integrity. For low level of overall disclosure, graph distortion reduces the ex-ante cost of equity. However for high level of disclosure graph distortion increases the ex-ante cost of equity.
    Keywords: equity capital, graphs
    JEL: M41 G14
    Date: 2007–04
  3. By: Jorge Martinez-Vazquez; Benno Torgler
    Abstract: This paper studies the evolution of tax morale in Spain in the post-Franco era. In contrast to the previous tax compliance literature, the current paper investigates tax morale as the dependent variable and attempts to answer what actually shapes tax morale. The analysis uses survey data from two sources: the World Values Survey and the European Values Survey, allowing us to observe tax morale in Spain for the years 1981, 1990, 1995, and 1999/2000. The study of the evolution of tax morale in Spain over nearly a 20-year span is particularly interesting because the political and fiscal system evolved very rapidly during that period.
    Keywords: Spain, Tax morale, Tax compliance, Constitutional and political changes, fiscal system, endogenous preferences.
    JEL: H26 H73 K42 O17 Z13
    Date: 2007–08–14
  4. By: Andrea Colciago (Department of Economics, University of Milan-Bicocca)
    Abstract: We consider a standard growth model augmented with a share of rule of thumb con- sumers. A Government ?nances a preset level of public expenditure through ?at tax rates on labor and capital income and also makes lump sum transfers to non ricardian consumers. It has been shown in representative agents models with perfect competition that balanced budget rules with endogenous tax rates are likely to generate indetermi- nacy of the perfect foresight equilibrium. We show that the presence of rule of thumb consumers reduces this possibility. Further, we show that a ?scal reform which features a reduction in the capital income tax rate and leads to the steady state where the welfare of non ricardian agents is maximized could be Pareto improving. This is obtained via a direct redistribution of resources to rule of thumb consumers along the transition path.
    Keywords: Non Ricardian Agents, Fiscal Policy, Capital Income Tax Rate
    JEL: E62
    Date: 2007

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