nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2008‒07‒05
six papers chosen by
Alexander Harin
Modern University for the Humanities

  1. Tax Evasion and Growth: a Banking Approach By Max Gillman; Michal Kejak
  2. Measuring the Location of Production in a World of Intangible Productive Assets, FDI, and Intrafirm Trade By Robert E. Lipsey
  3. History of a very special romance: emergence and difussion of double entry book-keeping in Mexico By Batiz-Lazo, Bernardo; Hernandez-Borreguero, Julian; Maixe-Altes, J. Carles; Nu~ez-Torrado, Miriam
  4. U.S. Defense Contracts During the Tax Expenditure Battles of the 1980s By Susan Guthrie; James R. Hines, Jr.
  5. Uses of National Accounts; History, International Standardization and Applications in the Netherlands By Bos, Frits
  6. The EU VAT Treatment of Public Sector Bodies: Slowly Moving in the Wrong Direction By Rita de la Feria

  1. By: Max Gillman (Cardiff University); Michal Kejak (The Center for Economic Research and Graduate Education of Charles University (CERGE EI))
    Abstract: The paper formalizes the relation between flat taxes and growth when there is a competitive equilibrium tax evasion. A decentralized tax evasion service is supplied by the banking sector. The bank production function follows the financial intermediation microfoundation approach, with deposits as an input. Across a class of endogenous growth models, tax evasion decreases the effective tax rate, and thereby lessens the negative effect of taxes on growth. And as the tax rate rises, tax evasion causes the growth rate to fall by less. Underlying the results is a fiscal principle whereby tax evasion creates, or magnifies, a rising demand price sensitivity to higher tax rates.
    Keywords: Tax evasion, financial intermediation, endogenous growth, and flat taxes.
    JEL: E13 E62 H26 O41
    Date: 2008–06
  2. By: Robert E. Lipsey
    Abstract: As production comes to depend more on intangible productive assets, the location of production by multinational firms becomes increasingly ambiguous. The reason is that, within the firm, these assets have no clear geographical location, but only a nominal location determined by the firm's tax or legal strategies. <br><br>The effects of these location ambiguities, and the resulting distortions for tax reasons of the location of production, are described and it is estimated that for U.S. firms' affiliates in a few tax havens alone, the exaggeration of value added in those locations amounted, in 2005, to about 4 percent of worldwide affiliate sales, and the exaggeration of sales to about 10 percent of worldwide affiliate sales. Some possibilities for estimating the location of production that could supersede the present dependence on accounting measures distorted by tax-saving policies are described.
    JEL: D2 F23 H25
    Date: 2008–06
  3. By: Batiz-Lazo, Bernardo; Hernandez-Borreguero, Julian; Maixe-Altes, J. Carles; Nu~ez-Torrado, Miriam
    Abstract: English abstract There is consensus in Mexican accounting historiography on the use of double entry bookkeeping by the end of the 19th century on both private and public enterprise. However, there is conflicting and even contradictory accounts as to when exactly did this technique arrived to the then New Spain (Nueva Espana) as well as its difussion during colonial and post-colonial eras. In this article we address this conflict first by using primary and secondary source material from both Spain and its former colony. Resumen Existe consenso en la historiografía contable mexicana sobre el uso de la partida doble en la hacienda pública y en el ámbito privado desde finales del siglo XIX. Sin embargo, las fuentes y la información disponible son contradictorias respecto a su origen y difusión durante la colonización española y tras la independencia. Este artículo se propone acotar dicho debate y obtener nuevas conclusiones. Para alcanzar estos objetivos, por un lado revisamos la historia de la contabilidad novohispana y metropolitana; y, por otro, contrastamos estos resultados utilizando fuentes primarias y nuevas evidencias de archivo.
    Keywords: Mexico; Spain; double entry bookkeeping;
    JEL: M41 N36
    Date: 2008–06
  4. By: Susan Guthrie; James R. Hines, Jr.
    Abstract: This paper considers the impact of the tax treatment of U.S. military contractors. Prior to the early 1980s, taxpayers were permitted to use the completed contract method of accounting to defer taxation of profits earned on long term contracts. Legislation passed in 1982, 1986 and 1987 required that at least 70 percent of the profits earned on long-term contracts be taxed as accrued, thereby significantly reducing the tax benefits associated with long term contracting. Comparing contracts that were ineligible for the tax benefits associated with long term contracting with those that were eligible, it appears that between 1981 and 1989 the duration of U.S. Department of Defense contracts shortened by an average of between one and 3.5 months, or somewhere between 6 and 29 percent of average contract length. This pattern suggests that the tax benefits associated with long term contracts promoted artificial contract lengthening prior to passage of the 1986 Act. The evidence is consistent with a behavioral model in which the Department of Defense ignores the federal income tax consequences of its procurement actions, thereby indirectly rewarding contractors who are able to benefit from tax expenditures of various types.
    JEL: H25 H57
    Date: 2008–06
  5. By: Bos, Frits
    Abstract: The national accounts is commonly known by its key-aggregates (e.g. GDP and saving) and their role in public debate and decision-making. However, the national accounts plays many different roles for many different uses. This paper provides an overview of the development of these roles and uses since the seventeenth century. Three periods are distinguished: the early estimates (1660-1930), revolutionary decades (1930-1950) and the era of the international guidelines (1950-present). The paper discusses these roles and uses also much more in detail for one country: the Netherlands, a country which played an important role in modern national accounting and where expert data users, like the CPB, SCP and the Dutch central bank, have developed several interesting applications of the national accounts.
    Keywords: Uses of the national accounts; history of national accounting; history of taxation; economic growth; Dutch national accounts; relevance and reliability of the national accounts; Petty; King; Vauban; Quesnay; Keynes; Clark; Kuznets; Leontief; Tinbergen; Hicks; van Cleeff; Stone; Meade; guidelines on national accounting; European unification; macro-economic modeling and forecasting; CPB; SCP; Dutch central bank; fiscal policy; productivity analysis; performance management; national accounts and welfare; measurement in economics
    JEL: B0 C82 E01
    Date: 2008
  6. By: Rita de la Feria (Oxford University Centre for Business Taxation)
    Abstract: In most countries applying a VAT system, the activities and transactions undertaken by public sector bodies are not subject to full taxation. The rationale usually invoked to justify lack of full taxation is of a mixed conceptual and political kind. On one hand, there is a view that the activities of those bodies are hard to tax and that, in practice, it is almost impossible to establish a single VAT treatment applicable to all of them. One the other hand, and more importantly, there is a perception that exclusion of the products supplied by public sector bodies from full taxation, achieves social and distributional aims. The rule under the EU VAT system is that supplies by public sector bodies are non-taxable. In practice, however, the VAT treatment of public sector bodies is extremely complex, giving rise to significant legal problems and economic distortions. The aim of this paper is to consider the current legislative framework, with special consideration being given to recent developments in this area, at both legislative and jurisprudential levels, in an attempt to determine whether they constitute positive progress, or whether together they represent a slow and subtle move towards a further deepening of the system’s already existing flaws.
    Date: 2008

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