nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2010‒05‒02
twenty papers chosen by
Alexander Harin
Modern University for the Humanities

  1. Specific Accounting Records for General Insurance in Conditions of the Harmonizing Romanian Legislation with International Accounting and Financial Reporting By Dobrin, Marinica
  2. Alternative Systems of Business Tax in Europe: An applied analysis of ACE and CBIT Reforms By Ruud de Mooij; Michael P. Devereux
  3. Effective levels of company taxation within an enlarged EU By ZEW
  4. Can lower tax rates be bought? Business rent-seeking and tax competition among U.S.States By Robert S. Chirinko; Daniel J. Wilson
  5. Tax compliance under tax regime changes By Heinemann, Friedrich; Kocher, Martin G.
  6. Study to quantify and analyse the VAT gap in the EU-25 Member States By Reckon
  7. Is agglomeration taxable? By Jordi Jofre-Monseny
  8. Should tax bases overlap in a federation with lobbying? By Alejandro Esteller-Moré; Umberto Galmarini; Leonzio Rizzo
  9. Fiscal Adjustment in Sudan: Size, Speed and Composition By Kenji Moriyama; S. M. Ali Abbas; Abdul Naseer
  10. Innovative Financing at a Global Level By European Commission
  11. Tax Revenue Response to the Business Cycle By Cemile Sancak; Ricardo Velloso; Jing Xing
  12. Tax Morale and Compliance Behavior: First Evidence on a Causal Link By Martin Halla
  13. Reflections on the Tax Working Group Report By John Creedy
  14. On the political economy of tax limits By Stephen Calabrese; Dennis Epple
  15. Role of financial statements as management tools to companies that use and exploit natural resources By Dobrin, Marinica
  16. Headquarter Relocations and International Taxation By Johannes Voget
  17. Value of intangibles arising from R&D activities By Ana Maria Bandeira; Óscar Afonso
  18. Don't tax me? Determinants of individual attitudes toward progressive taxation By Heinemann, Friedrich; Hennighausen, Tanja
  19. Tax differences and foreign direct investment in the EU27 By Hansson , Åsa; Olofsdotter, Karin
  20. The Embodiment of Intangible Investment Goods: a Q-Theory Approach By Nazim Belhocine

  1. By: Dobrin, Marinica (Universitatea Spiru Haret, Facultatea de Management Financiar Contabil)
    Abstract: This paper presents features of records related to general insurance in Romania in terms of harmonization with European directives specific to insurance. Specific records show mainly life insurance: income and expenditure accounts of the operations of insurance (premiums written record, the record collection of insurance premiums, cancellation of insurance policies, recording compensation expense), accounting for costituirea operations and use of technical reserves (accounting reserve premiums, claims reserve accounting, reserve accounting for Unexpired risks, catastrophe reserve accounting, reserve accounting for benefits and risturns).
    Keywords: insurance; income; expenses; premiums underwritten; profit/loss year; insurance intermediaries; insurance policy; compensation; technical reserves; premium reserves; reserves for damages; unexpired risks reserve; reserve expenditure equalization; reserve for disaster
    JEL: A11
    Date: 2010–04–25
  2. By: Ruud de Mooij (CPB Netherlands); Michael P. Devereux (Oxford University Centre for Business Taxation)
    Abstract: This paper explores the economic implications of an allowance for corporate equity (ACE), a comprehensive business income tax (CBIT) and a combination of the two in the EU. We illustrate the key trade-offs in designing ACE and CBIT in the presence of tax distortions at various decision margins of firms, such as its financial structure, investment, profit allocation and discrete location. Using an applied general equilibrium model for Europe, we quantitatively assess the effects of ACE, CBIT and combined reforms in EU countries. The results suggest that ACE is welfare improving as long as corporate tax rates are not used to cover the cost of base narrowing. CBIT typically reduces welfare by exacerbating marginal investment distortions. When governments adjust statutory corporate tax rates to balance their budget, however, CBIT reforms become more attractive while ACE reforms are welfare reducing in a number of countries. European coordination of reforms mitigates fiscal spillovers within the EU and renders ACE reforms more, and CBIT reforms less, attractive for welfare. A combination of ACE and CBIT reforms can be designed to be revenue neutral and welfare improving through smaller financial distortions.
    Keywords: European Union, corporate taxation
    JEL: H25
    Date: 2009–05
  3. By: ZEW
    Abstract: The project 'Effective tax rates in an enlarged European Union' is based on the methodology used for the calculation of effective tax rates (ETRs) as set out by Devereux and Griffith (1999, 2003). It extends the scope of the calculation of ETRs conducted under the study on effective levels of company taxation within an enlarged EU (2008). The project includes a focus on the effects of tax reforms in the EU27 for the period 1998-2009 and their impact on the level of taxation for both domestic and cross-border investment.
    Keywords: European Union, taxation, corporate taxation, effective tax rates
    JEL: H25
    Date: 2010–03
  4. By: Robert S. Chirinko (University of Illinois at Chicago); Daniel J. Wilson (Federal Reserve Bank of San Francisco)
    Abstract: The standard model of strategic tax competition assumes that government policymakers are perfectly benevolent. We depart from this assumption by allowing policymakers to be influenced by the rent-seeking behavior of businesses. Campaign contributions may affect tax competition and enhance or retard the mobility of capital across jurisdictions. Based on a panel of 48 U.S. states and unique data on business campaign contributions, we find that contributions have a significant direct effect on tax policy, the economic value of a $1 business campaign contribution is nearly $4, the slope of the tax reaction function is negative, and the empirical results are sensitive to state effects.
    Keywords: Campaign contributions, business taxation, state tax competition
    JEL: H71 H73 H25
    Date: 2010
  5. By: Heinemann, Friedrich; Kocher, Martin G.
    Abstract: In this paper we focus on the compliance effects of tax regime changes. According to the economic model of tax evasion, a tax reform should affect compliance through its impact on tax rates and incentives. Our findings demonstrate the importance of at least two further effects not covered by the traditional model: First, reform losers tend to evade more taxes after the reform. Second, a reform from a proportionate to a progressive system decreases compliance compared to a switch in the reverse direction. However, the level of compliance is generally higher under a progressive than under a proportionate regime. --
    Keywords: tax reforms,tax compliance,experiment
    JEL: C72 C91 H26
    Date: 2010
  6. By: Reckon
    Abstract: This report is concerned with quantifying and analysing the VAT gap in each EU Member State over the period 2000?2006. This report has been produced by Reckon LLP following a study commissioned by the European Commission, Directorate-General for Taxation and Customs Union. It is the result of independent work carried out by Reckon LLP, and does not necessarily reflect the opinions or position of the European Commission or of the national bodies consulted. Any errors are our own.
    Keywords: European Union, taxation, value added taxation, tax fraud
    JEL: H25 H26
    Date: 2009–09
  7. By: Jordi Jofre-Monseny (University of Barcelona & IEB)
    Abstract: Several theoretical papers that examine tax competition with agglomeration effects have stressed the possibility that the governments of jurisdictions in which economic activity is concentrated may tax firms more heavily (taxable agglomeration rents). In this paper, we examine the tax rate setting decisions taken with regard to the Spanish municipal business tax (Impuesto sobre Actividades Económicas). The analysis, carried out with a sample of 2,772 municipalities, focuses on the effect that urbanization economies, localization economies and the market potential of municipalities have on their business tax rates. High urbanization economies and high localization economies are found to increase the business tax rate. Although the evidence is weaker, the results also indicate that municipalities with better access to demand (of consumers) set higher tax rates
    Keywords: Local taxes, agglomeration economies, tax competition
    JEL: H3 H7 R
    Date: 2010
  8. By: Alejandro Esteller-Moré (Universitat de Barcelona & IEB); Umberto Galmarini (Università dell'Insubria); Leonzio Rizzo (Università di Ferrara & IEB)
    Abstract: We examine the tax assignment problem in a federation with two layers of government sharing an elastic tax base, in which Leviathan policy makers levy an excise tax in an imperfectly competitive market and producers lobby for tax rate cuts. If the lobby of producers is very influential on policy makers, we find that taxation by both layers of government might be optimal, provided that the market of the taxed good is highly concentrated; otherwise, it is optimal to assign the power to tax only to one level of government. Taxation by both layers of government is not optimal either when the influence of the lobby is weak, whatever the degree of market power. We also examine a richer set of tax setting outcomes, by considering the possibility that state policy makers have heterogeneous tax policy objectives.
    Keywords: vertical tax externalities, tax assignment, lobbying, specific taxation
    JEL: H71 H77 D70
    Date: 2010
  9. By: Kenji Moriyama; S. M. Ali Abbas; Abdul Naseer
    Abstract: The paper aims to identify the optimal size, speed and composition of the medium-term fiscal adjustment in the context of Sudan's limited oil reserves. The permanently sustainable non-oil primary balance approach suggests the need for significant fiscal adjustment over the medium term, requiring a widening of the tax base. Cross-country comparisons highlight VAT and personal income tax (as well as tax administration) as key areas for reform. The paper also suggests the need for complementary expenditure-side measures in the areas of petroleum pricing and anchoring fiscal policy in non-oil indicators.
    Keywords: Cross country analysis , Economic models , Fiscal policy , Fiscal reforms , Government expenditures , Income taxes , Oil producing countries , Oil revenues , Oil sector , Pricing policy , Sudan , Tax administration , Tax systems , Value added tax ,
    Date: 2010–03–26
  10. By: European Commission
    Abstract: The European Commission services published a staff working document assessing the main sources of innovative financing under discussion. The analysis shows that for some of the instruments a "double dividend" of both raising revenues and improving market efficiency and stability could be reaped, in particular by putting a price on risk-taking in the financial sector and on carbon emissions.
    Keywords: European Union, taxation, financial transaction tax, bank levy, bonus tax, carbon tax, financial institutions
    JEL: G15 G18 G28 H21 H22 H23 H25 H27 H62
    Date: 2010–04
  11. By: Cemile Sancak; Ricardo Velloso; Jing Xing
    Abstract: This paper examines tax revenue during the business cycle by estimating the relationship between tax revenue efficiency and the output gap. We find a positive and significant relationship between these variables; results are consistent for quarterly and annual data, and across advanced and developing economies. We also find that a worsening (improvement) in the VAT C-efficiency is driven by shifts in consumption patterns and changes in tax evasion during contractions (expansions). A key implication is that, particularly during major economic booms and downturns, policy makers should look beyond simple, long-run revenue elasticities and incorporate into their analysis the effects of the economic cycle on tax revenue efficiency.
    Keywords: Business cycles , Economic forecasting , Economic models , Fiscal policy , Tax revenues , Value added tax ,
    Date: 2010–03–19
  12. By: Martin Halla
    Abstract: Recent literature on tax evasion emphasizes the importance of moral considerations to explain compliance behavior. As a consequence scholars aim to identify factors that shape this so-called tax morale. However, the causal link between tax morale and actual compliance behavior is not established yet. Exploiting exogenous variation in tax morale - given by the inherited part of tax morale of American-born from their ancestors country of origin - our instrumental variable analysis provides first evidence on a causal effect of tax morale on the size of the underground production.
    Keywords: Tax morale, tax evasion, tax compliance, underground production
    JEL: A13 O17 H26 Z13 C81
    Date: 2010–04
  13. By: John Creedy
    Abstract: This article reviews the Report of the Tax Working Group of the Victoria University of Wellington, which included individuals from the Treasury and the Inland Revenue Department, as well as from the business community. The Report makes an important contribution to the tax policy debate in New Zealand by setting out the reasons for reform, the basic principles used to consider alternative policies, and the advantages and disadvantages of a range of reform proposals. The purpose of this review of the Report is not to discuss the proposals and recommendations in detail, but to consider a number of aspects concerning the evaluation of tax structures and to try to clarify some arguments which are not stated explicitly in the Report. An indication of useful next steps is also given.
    Date: 2010
  14. By: Stephen Calabrese (Carnegie Mellon University); Dennis Epple (Carnegie Mellon University)
    Abstract: We study the political economy of state limitations on the taxing powers of local governments, investigating the effects of such restriction on housing markets, community composition, and types of taxes and expenditures undertaken by local governments. We characterize equilibrium when voters choose values of multiple policy (tax and expenditure) instruments, finding that tax limitations have very substantial effects on housing prices and the composition of communities. Political support for tax limits comes from suburban voters and from a subset of central-city voters. Support for tax limits come even from residents of communities that are not constrained by the limits.
    Keywords: Tax limits, redistribution, public goods, property tax, income tax, head tax
    JEL: D72 D78 H30 H42 H72 H73
    Date: 2010
  15. By: Dobrin, Marinica (Universitatea Spiru Haret. Facultatea de Management Financiar Contabil)
    Abstract: Statements and financial reports are tools allowing managers as well as external analysts to make quality and / or quantitative value judgments regarding status, dynamics and prospects of a firm. By analyzing these instruments, internal and external information is processed in order to formulate relevant assessments on the situation at the company level and on the quality of its performance, at the degree of risk in a competitive environment.
    Keywords: Balance sheet; income statement; cash flow picture
    JEL: A11
    Date: 2010–04–23
  16. By: Johannes Voget (Oxford University Centre for Business Taxation, CentER, Tilburg University)
    Abstract: This paper examines the extent of international headquarter relocations worldwide. About 6 percent of all multinationals relocated their headquarter to another country in the 1997-2007 period. The paper presents empirical evidence on the role of tax in these relocation decisions. It considers a sample of 140 multinationals that relocated their headquarters over the past decade and compares them to a control group of 1943 multinationals that have not done so. It is found that the additional tax due in the home country upon repatriation of foreign profits has a positive effect on the probability of relocation. The empirical results suggest that an increase in the repatriation tax by 10 percentage points would raise the share of relocating multinationals by 2.2 percentage points, equivalent to an increase in the number of relocations by more than one third. Furthermore, the introduction of controlled foreign corporation legislation also has a positive effect on the number of relocations.
    Keywords: international taxation, headquarter relocation, multinational, corporate inversion, controlled foreign corporation
    JEL: F23 H25 H32
    Date: 2010
  17. By: Ana Maria Bandeira (Instituto Superior de Contabilidade e Administração do Porto, EDGE and Faculdade de Economia da Universidade do Porto); Óscar Afonso (CEF.UP, OBEGEF and Faculdade de Economia, Universidade do Porto, Portugal)
    Abstract: This paper develops an empirical approach using econometric techniques for panel data which aims to contribute to the reduction/elimination of the deviation between the book and market value of firms. Based on 20 of the firms with the largest number of patents granted between 1996 and 2006, the results show that: (i) the increase in the return on equity following from an increase in the share of investment in R&D is greater in the long run; (ii) there is a positive relationship between the results (and the value of firms) and R&D activities; (iii) by updating the additional periodical results generated by investment in R&D, the present value of the intangible asset can be determined.
    Keywords: R&D, Financial information, Value of intangibles, Market value, Panel Data
    JEL: C23 G12 G31 M41 O32
    Date: 2010–04
  18. By: Heinemann, Friedrich; Hennighausen, Tanja
    Abstract: This contribution empirically analyses the individual determinants of tax rate preferences. For that purpose we make use of the representative German General Social Survey (ALLBUS) that offers data on the individual attitudes toward progressive, proportional, and regressive taxation. Our theoretical considerations suggest that beyond self-interest, information, fairness considerations, economic beliefs and several other individual factors drive individual preferences for tax rate structures. Our empirical results indicate that the self-interest view does not offer the sole explanation for the heterogeneity in attitudes toward progressive taxation. Rather, we show that the choice of the favoured tax rate is also driven by fairness considerations. --
    Keywords: tax progression,policy preferences,fairness,ALLBUS
    JEL: H89 D63 C42 A13
    Date: 2010
  19. By: Hansson , Åsa (Department of Economics, Lund University); Olofsdotter, Karin (Department of Economics, Lund University)
    Abstract: Abstract: We empirically analyze the impact of corporate tax rates and agglomeration economies on FDI using panel data on bilateral FDI flows and stocks in the enlarged European Union. The novelty of the paper is that it explicitly deals with agglomeration forces and how these may explain differences in tax policies between new and old member countries. The empirical analysis closely follows the implicit underlying model where the foreign direct investment decision is seen as a two-step procedure that entails: 1) whether or not to invest; and 2) the amount of FDI to invest. Using recent data on corporate tax rates for all 27 EU member countries from 1995-2006, we find that there are large differences in the determinants of FDI going to the EU15 and new member countries. While tax differentials mainly seem to influence FDI flows to new members, agglomeration economies appear to play a somewhat more important role for the amount of investment made within the EU15. In addition, significant differences are found between the determinants of the extensive and intensive margins of the FDI decision.
    Keywords: Corporate taxes; agglomeration economies; foreign direct investment
    JEL: F12 F15 F21 H71
    Date: 2010–03–15
  20. By: Nazim Belhocine
    Abstract: This paper extends the q-theory of investment to model explicitly the decision of firms to invest in intangibles and measures the contribution of intangible goods to the overall capital stock in the U.S. The model highlights the embodiment of intangible goods in tangibles and the role of relative price movements in the measurement of the contribution of each type of investment to the overall capital stock. The downward trend in the aggregate investment deflator series reported by national accounts is found to have a significant downward bias in the 90s. The model also shows that the growth in the overall capital stock from the late-80s until 2000 was driven mainly by an increase in the contribution of intangibles. However, the contribution of intangibles fell consistently after 2000. These results underscore the importance of accounting for the movements in the price of intangibles rather than focusing only on their rising share in overall investment.
    Keywords: Capital , Capital goods , Economic models , Investment , Private sector ,
    Date: 2010–04–02

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