nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2010‒05‒29
nine papers chosen by
Alexander Harin
Modern University for the Humanities

  1. Corporate tax regime and international allocation of ownership By Johannes Becker; Marco Runkel
  2. The elusiveness of neutrality – why is it so difficult to apply VAT to financial services? By Kerrigan, Arthur
  3. Optimum taxation of bequests in a model with initial wealth By Johann K. Brunner; Susanne Pech
  4. Environmental tax reform and double dividend evidence By Maurizio Ciaschini, Rosita Pretaroli, Francesca Severini, Claudio Socci
  5. The Effect of Tax Treaties on Multinational Firms: New Evidence from Microdata By Davies, Ronald B.; Norbäck, Pehr-Johan; Tekin-Koru, Ayça
  6. Balance Sheet Network Analysis of Too-Connected-to-Fail Risk in Global and Domestic Banking Systems By Jorge A. Chan-Lau
  7. Intellectual Property Rights in International Investment Agreements: An Overview By Lahra Liberti
  8. From Pigou to Extended Liability: On the Optimal Taxation of Externalities under Imperfect Financial Markets. By Tirole, Jean
  9. The Distribution of Top Incomes in Five Anglo-Saxon Countries over the Twentieth Century By A B Atkinson; Andrew Leigh

  1. By: Johannes Becker (Max Planck Institute for Intellectual Property, Competition and Tax Law); Marco Runkel (University of Magdeburg)
    Abstract: Would the introduction of a corporate tax system with consolidated tax base and formula apportionment lead to socially wasteful mergers and acquisitions across borders? This paper analyzes a two-country model with an international investor considering acquisitions of already existing target firms in a high-tax country and a low-tax country. The investor is able to shift profits from one location to another for tax saving purposes. Two systems of corporate taxation are compared, a system with separate accounting and a system with tax base consolidation and formula apportionment. It is shown that, under separate accounting, the number of acquisitions is inefficiently high in both the high tax and the low tax country. Under formula apportionment, the number of acquisitions is inefficiently high in the low tax country and inefficiently low in the high tax country. Under tax competition, a novel externality arises that worsens the efficiency properties of equilibrium tax rates under separate accounting, but may play an efficiency enhancing role under formula apportionment.
    Keywords: Corporate Taxation, Separate Accounting, Formula Apportionment
    JEL: H25 F23
    Date: 2010
  2. By: Kerrigan, Arthur
    Abstract: Under the VAT system of the European Union, domestic supplies of financial services are exempt. That exemption has significant drawbacks, not least of which is that it compromises the neutrality of the tax. In this article, the author indicates how, depending on government policy views, margin-based financial services could be taxed. He also indicates how financial institutions could give new impetus to the discussion on the VAT treatment of the services in that sector.
    Keywords: VAT; Financial Services; neutrality; EU
    JEL: K3
    Date: 2010–03–18
  3. By: Johann K. Brunner; Susanne Pech
    Abstract: We formulate an optimum-taxation model, where parents leave bequests to their descendants for altruistic reasons. In contrast to the standard model, individuals differ not only in earning abilities, but also ininitial (inherited) wealth. In this model a redistributive motive for an inheritance tax - which is equivalent to a uniform tax on all expenditures - arises, given that initial wealth increases with earning abilities. Its introduction increases intertemporal social welfare or has an ambiguous effect, depending on whether the bequeathing generation can adjust their behaviour and whether the external effect related to altruism is accounted for in the social objective.
    Date: 2010–01
  4. By: Maurizio Ciaschini, Rosita Pretaroli, Francesca Severini, Claudio Socci (University of Macerata, Politechnical University of Marche)
    Abstract: <div style="text-align: justify;">The increasing attention to environmental damage and the problem of climate changes have led many studies to concentrate on environmental taxation as an incentive-based instrument of environmental policy. Focusing on the relationship among environmental, labour market policies and institutional sectors, this paper aims to investigate the economic effects of a fiscal reform designed with the intent of reducing the Greenhouse Gas (GHG) emissions, according to Kyoto Protocol. For this purpose, a Computable General Equilibrium (CGE) model is used with imperfection market for labour factor and a green tax on commodity output depending on the level of CO2 emission is introduced. Tax revenues are than completely distributed to the economy in order to reduce the income tax or to cut the regional tax on commodity value added. In this way a revenue-neutral environmental policy is tested and the double dividend and any other effect on national economy are assessed. The application will be done on a Social Accounting Matrix (SAM) for Italy for the 2003 year.</div>
    Keywords: Environmental taxation,CGE model,SAM
    JEL: O1 O11
    Date: 2010–05
  5. By: Davies, Ronald B. (University of Oregon); Norbäck, Pehr-Johan (Research Institute of Industrial Economics (IFN)); Tekin-Koru, Ayça (Oregon State University)
    Abstract: This paper uses affiliate level data from Swedish multinationals to examine the impact of tax treaties on both overall affiliate sales and the composition of those sales. In line with previous results, we find little evidence for an effect of treaties on the level of total sales. We do, however, find that a tax treaty increases the probability of investment by a firm in a given country. In addition, we find that a treaty reduces exports to the parent but increases imports of intermediate inputs from the parent. This is consistent with treaties increasing the effective host tax. This suggests that tax treaties impact the behavior of multinationals along some dimensions but not along others.
    Keywords: Tax Treaties; Multinational Firms; Foreign Direct Investment
    JEL: F21 F23 H25
    Date: 2010–05–19
  6. By: Jorge A. Chan-Lau
    Abstract: The 2008/9 financial crisis highlighted the importance of evaluating vulnerabilities owing to interconnectedness, or Too-Connected-to-Fail risk, among financial institutions for country monitoring, financial surveillance, investment analysis and risk management purposes. This paper illustrates the use of balance sheet-based network analysis to evaluate interconnectedness risk, under extreme adverse scenarios, in banking systems in mature and emerging market countries, and between individual banks in Chile, an advanced emerging market economy.
    Keywords: Bank accounting , Banking systems , Capital , Credit risk , Developed countries , Emerging markets , Financial institutions , Financial risk , Globalization , International banking , Risk management ,
    Date: 2010–04–27
  7. By: Lahra Liberti
    Abstract: This article provides an overview of recent developments in investment treaty practice with regard to the protection of intellectual property rights (IPRs). The analysis departs from traditional IPR studies developed almost exclusively in the context of the WTO-TRIPS Agreement. The aim of this study is to clarify the extent to which and how international investment agreements (IIAs), including Regional Trade Agreements (RTAs) with an investment chapter, increase the scope of IPR protection beyond TRIPS minimum standards. Some IPR provisions found in the sample of RTAs extend IPR protection beyond WTO-TRIPS minimum standards, by providing supplementary coverage of specific standards or additional obligations under the intellectual property chapter. Expanded IPR protection can also derive from the unqualified treatment protection provisions found in IIAs. This note further explores possible reasons for the limited role played by investor-state arbitration in the enforcement of IPRs.
    Keywords: intellectual property rights, international investment, investment agreements
    JEL: F21 F23 K33
    Date: 2010–05
  8. By: Tirole, Jean
    Date: 2010–04
  9. By: A B Atkinson; Andrew Leigh
    Abstract: Taxation data have been used to create long-run series for the distribution of top incomes in quite a number of countries. Most of these studies have focused on the national experience of individual countries, but we can also learn from cross-country comparisons. Comparative analysis is therefore the next stage in the research program. At the same time, we know from other fields that there are dangers in simply pooling all available time series, without regard to the specific nature of data and reality. In this paper, we therefore adopt an intermediate approach, taking five Anglo- Saxon countries that have relatively similar backgrounds and tax systems: Australia, Canada, New Zealand, the UK, and the US. The first part of the paper tackles the challenge of comparability of income-tax based estimates across countries and across time. The second part summarizes the evidence about top income shares. Across these five countries, the shares of the very richest exhibit a strikingly similar pattern, falling in the three decades after World War II, before rising sharply from the mid-1970s onwards. The share of the top 1 percent is highly correlated across Anglo-Saxon countries, more so than the share of the next 4 percent. The third part of the paper looks at the relationship between taxes and top income shares. Controlling for country and year fixed effects, we find that a reduction in the marginal tax rate on wage income is associated with an increase in the share of the top percentile group. Likewise, a fall in the marginal tax rate on investment income (based on a lagged moving average) is associated with a rise in the share of the top percentile group.
    Keywords: inequality, taxation, Australia, Canada, New Zealand, United Kingdom, United States
    JEL: D31 H23 N30
    Date: 2010–04

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