nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2007‒11‒24
five papers chosen by
Alexander Harin
Modern University for the Humanities

  1. Is a Flat Tax Feasible in a Grown-up Welfare State? By Clemens Fuest; Andreas Peichl; Thilo Schaefer
  2. The Minnesota Income Tax Compliance Experiment: Replication of the Social Norms Experiment By Coleman, Stephen
  3. A cluster-based approach for the application of EMAS By Frey , Marco; Iraldo, Fabio Iraldo
  4. Does It Pay Firms to Register for Taxes? The Impact of Formality on Firm Profitability By David McKenzie; Yaye Seynabou Sakho
  5. On the Incentive Effects of Uncertainty in Monitoring Agents - A Theoretical and Experimental Analysis By Judith Avrahami; Werner Güth; Yaakov Kareev; Tobias Uske

  1. By: Clemens Fuest (CPE, University of Cologne and IZA); Andreas Peichl (CPE, University of Cologne); Thilo Schaefer (CPE, University of Cologne)
    Abstract: The success of the flat rate tax in Eastern Europe suggests that this concept could also be a model for the welfare states of Western Europe. The present paper uses a simulation model to analyse the effects of revenue neutral flat rate tax reforms on equity and efficiency for the case of Germany. We find that a flat rate tax with a low tax rate and a low basic allowance yields positive static welfare effects amounting to approximately 1.8 per cent of income tax revenue but increases income inequality. The increase in income inequality can be avoided by combining a higher tax rate with a higher basic allowance. But in this case the efficiency gains vanish. We conclude that, due to their limited efficiency effects and their problematic distributional impact, flat tax reforms are unlikely to spill over to the welfare states of Western Europe.
    Keywords: flat tax reform, equity, efficiency, distribution, welfare
    JEL: D31 D60 H20
    Date: 2007–11
  2. By: Coleman, Stephen
    Abstract: This research note reports the results of a follow-up experiment conducted to validate an earlier experiment showing that if taxpayers overestimate the prevalence of tax evasion, their voluntary compliance can be increased by informing them about the true rate of cheating. The result confirms that tax compliance is influenced partly by social conformity with perceived social norms against cheating. The experiments were done by the Minnesota Department of Revenue in 1995 and 1996, but only the first experiment has been publicly reported to date (Coleman, 1996).
    Keywords: Tax compliance; experiment; social norms; social conformity
    JEL: C9 Z1 H2 H26
    Date: 2007–11
  3. By: Frey , Marco; Iraldo, Fabio Iraldo
    Abstract: This paper analyses the benefits of the cluster approach in adopting EMAS (the EC Eco-Management and Audit Scheme) by some companies operating in the territorial area of Lucca. The cluster approach proves to be effective in stimulating and supporting the adoption of EMAS and, more in general, to provide a better environmental management by the interested companies. In order to start up and maintain this particular networking approach, there is to be a strong motivation by one or more actors in the cluster that are able to take the initiative and make shared resources and common tools available for the involved organisations. This motivation could be an EMAS related recognition or award for the Promotion Committee. In addition to that, it has to be stressed that accredited verifiers must be fully involved in the application of this kind of approaches, in order to really enable (and promote) the use of shared resources and common tools by all the organisations of a cluster.
    Keywords: environmental management; cluster approach; paper production
    JEL: Q56 M42 L60
    Date: 2007–05
  4. By: David McKenzie (World Bank, BREAD and IZA); Yaye Seynabou Sakho (World Bank)
    Abstract: This paper estimates the impact of registering for taxes on firm profits in Bolivia, the country with the highest levels of informality in Latin America. A new survey of micro and small firms enables us to control for a rich set of measures of owner ability and business motivations that can affect both profits and the decision to formalize. We identify the impact of tax registration on business profitability using the distance of a firm from the tax office where registration occurs, conditional on the distance to the city center, as an instrument for registration. Proximity to the tax office provides firms with more information about registration, but is argued to not directly affect profits. We find tax registration leads to significantly higher profits for the firms that the instrument affects. However, we also find evidence of heterogeneous effects of tax formality on profits. Tax registration is found to increase profits for the mid-sized firms in our sample, but to lower profits for both the smaller and larger firms, in contrast to the standard view that formality increases profits. We show that owners of large firms who have managed to stay informal are of higher entrepreneurial ability than formal firm owners, in contrast to the standard view (correct among smaller firms) that informal firm owners are low ability.
    Keywords: informal sector, entrepreneurial ability, tax registration
    JEL: O17 O12 D21
    Date: 2007–11
  5. By: Judith Avrahami; Werner Güth (Max-Planck Institute of Economics, Strategic Interaction Group, Jena, Germany); Yaakov Kareev; Tobias Uske (Max-Planck Institute of Economics, Strategic Interaction Group, Jena, Germany)
    Abstract: When two or more agents compete for a bonus and the agents' productivity in each of several possible occurrences depends stochastically on (constant) effort, the number of times that are checked to assign the bonus affects the level of uncertainty in the selection process. Uncertainty, in turn, is expected to increase the efforts made by competing agents (Cowen and Glazer (1996), Dubey and Haimanko (2003), Dubey and Wu ( 2001)). Theoretical predictions were derived and experimental evidence collected for the case of two competing agents, with the bonus awarded to that agent who outperforms the other. Levels of uncertainty (sampling occasions of productions, 1 or 3), cost of production (high or low), cost symmetry (asymmetric or symmetric), and piece-rate reward were manipulated factorially to test the robustness of the effects of uncertainty. For control, a single-agent case was also theoretically analyzed and empirically tested. The results indicate that, for tournaments, greater uncertainty does indeed lead to greater than expected effort and lower unit variable costs.
    Keywords: Monitoring, Tournament, Incentives, Uncertainty, Stochastic Production Technology
    JEL: J33 M42 M52 M55
    Date: 2007–11–21

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