nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2011‒03‒05
eleven papers chosen by
Alexander Harin
Modern University for the Humanities

  1. The Challenges of Corporate Income Taxes in a Globalised World By Emilio Albi
  2. Wealth and Wealth Transfer Taxation: A Survey By Helmuth Cremer; Pierre Pestieau
  3. Tax Evasion, Information Reporting, and the Regressive Bias Hypothesis By Simon Halphen Boserup; Jori Veng Pinje
  4. Individual Income Taxation: Income, Consumption, or Dual? By Robin Boadway
  5. The Administration of Tax Systems By John Hasseldine
  6. The Scale and Scope of Environmental Taxation By Agnar Sandmo
  7. Tax System Change and the Impact of Tax Research By Richard M. Bird
  8. The financial reporting quality effect on European firm performance By Cláudia Maria Ferreira Pereira Lopes; António Cerqueira; Elísio Brandão
  9. Direct versus Indirect Taxation: Trends, Theory and Economic Significance By Jorge Martinez-Vazquez; Violeta Vulovic; Yongzheng Liu
  10. Financing Subnational Governments with Decentralized Taxes By Roy Bahl
  11. Political Regimes, Institutions and the Nature of Tax Systems By Stanely L. Winer; Lawrence W. Kenny; Walter Hettich

  1. By: Emilio Albi (University of Madrid, Spain)
    Abstract: This paper reviews corporate income taxation in the context of the economic globalisation experienced in the last thirty years. Given present flows of capital and income between nations and the importance of multinational firms, due consideration can no longer be given to corporate taxation without contemplating international issues. The main purpose of this paper is to examine the current corporate tax trends derived from the changes occurred in the last three decades with a view to defining potential policy prescriptions aimed at making corporate taxation less distortionary and costly.
    Date: 2010–05–01
  2. By: Helmuth Cremer (Toulouse School of Economics (GREMAQ and IDEI); Pierre Pestieau (CREPP, University of LIege and CORE)
    Abstract: This paper provides a survey of the theoretical literature on wealth and wealth transfer taxation. Both forms of taxation are highly controversial and we present arguments in favor and against them. We adopt a theoretical and normative perspective. Our approach is comprehensive in the sense that wealth taxation is discussed as part of an overall tax system, dominated by income and commodity taxation.We show that a crucial factor in designing the tax structure is the motive underlying wealth accumulation and transfers.
    Keywords: wealth taxation, inheritance taxation, capital income taxation
    Date: 2010–05–01
  3. By: Simon Halphen Boserup (Department of Economics, University of Copenhagen); Jori Veng Pinje (Department of Economics, University of Copenhagen)
    Abstract: A robust prediction from the tax evasion literature is that optimal auditing induces a regressive bias in effective tax rates compared to statutory rates. If correct, this will have important distributional consequences. Nevertheless, the regressive bias hypothesis has never been tested empirically. Using a unique data set, we provide evidence in favor of the regressive bias prediction but only when controlling for the tax agency's use of third-party information in predicting true incomes. In aggregate data, the regressive bias vanishes because of the systematic use of third-party information. These results are obtained both in simple reduced-form regressions and in a data-calibrated state-of-the-art model.
    JEL: D82 H26 K42
    Date: 2010–10
  4. By: Robin Boadway (Queen's University, Canada and CEDifo)
    Abstract: In the course of our study of individual tax systems, we necessarily touch on all of the above issues. Before doing so, it is worth emphasizing that the personal tax is one of three main broad-based taxes whose bases overlap to a considerable extent, the others being the VAT and payroll taxes. The bases of the latter two taxes are roughly similar in present value terms. They differ only to the extent that an individual’s net inheritances (the present value of inheritances less bequests) and other net transfers are positive. Both are essentially taxes that distort the labor-leisure choice (including the participation decision), at least to the extent that payroll taxes are not used to finance actuarially fair transfer programs. Thus, if payroll taxes finance the equivalent of fully contributory pension funds, they are unlikely to impose a distortion on the labor-leisure choice. In practice, payroll taxes are usually not earmarked to individual accounts so this is not an issue. Since for most taxpayers the bulk of taxable income consists of labor income, there is considerable overlap among the three bases. The main difference is that individual taxes might include elements of capital income in the base (for which the overlap might be with wealth or property taxes). That being the case, the overall tax rate faced by individuals includes all three tax rates.
    Date: 2010–05–01
  5. By: John Hasseldine (Tax Research Institute, Nottingham University Business School, University of Nottingham, U.K.)
    Abstract: This chapter analyses recent developments in tax administration and best practice. The chapter begins by contextualizing tax administration through a discussion on the necessary separation between the operational tasks performed in tax administration and the more generic, but nevertheless crucial, issues of organization, strategy and internal management required in tax administration. The chapter then describes the recent genesis and the current context of tax administration - especially in Europe (and in Spain). The chapter then identifies prior attempts at benchmarking best practice before finally offering some conjectures on future best practice.
    Date: 2010–05–01
  6. By: Agnar Sandmo (Norwegian Schol of Economics and Business Administration (NH))
    Abstract: This paper provides a discussion of the principles of environmental taxation. It considers the empirical identification of environmental taxes and the problems associated with the choice of the right tax base from the point of view of the correction of market incentives. It then presents a model of optimal second best environmental taxation when taxes must fulfil the double role of modifying market incentives and generating tax revenue. It also considers the issues of the double dividend, the interaction between intrinsic and extrinsic incentives and the problem of designing a tax policy for the alleviation of global environmental problems.
    Date: 2010–05–01
  7. By: Richard M. Bird (University of Toronto)
    Abstract: This paper considers the proposition that recent tax policy trends have been decisively influenced by tax research. In both the OECD countries and developing countries, the two most important changes in tax systems in recent decades have been the introduction of the VAT and the general lowering and flattening of statutory income tax rates. The downward pressure on personal and corporate income tax rates has certainly been supported, if not initiated, by the increasing research measuring the distortions caused by high marginal tax rates. Equally, the widespread adoption of VAT is probably due at least in part to acceptance of the economic argument that this form of sales tax is less economically distorting. For the most part, however, countries have not done these things because economists produced persuasive theories or empirical evidence that it would be good to do them but for their own reasons. After reviewing a number of aspects of how tax policy decisions are made in practice, the paper concludes that if tax scholars are interested in improving policy, they should focus not on the short-term political game within which policy decisions are inevitably made in all countries but rather on the long-term game of building up institutional capacity, both within and outside governments, to articulate relevant ideas for change, to collect and analyze relevant data, and to assess and criticize the effects of such changes as are made. Economic research may provide valuable inputs into policy decisions, both because it is the only approach focusing on efficiency concerns and because it can (but often fails to) say some useful things about the distributional outcomes that impact more immediately on policy decisions in most countries. But it is not and cannot be a substitute for the development of the political institutions that need to exist if ‘good’ tax policy is to be developed and implemented.
    Keywords: tax policy, tax research, developing countries, administratin, political economy
    Date: 2010–05–01
  8. By: Cláudia Maria Ferreira Pereira Lopes (Instituto Superior de Contabilidade e Administração do Porto); António Cerqueira (Faculdade de Economia da Universidade do Porto); Elísio Brandão (Faculdade de Economia da Universidade do Porto)
    Abstract: This paper analyses whether accounting quality produces any impact on firm performance using only accounting data: the abnormal accruals methodology to evaluate accounting quality and ROA to determine firm performance. This is important because accounting information guides investment decisions (Bradshaw et al., 2004 and Verdi, 2006). For 17 European countries, findings confirm the mechanical relationship between accruals and accounting measures of performance: income increasing abnormal accruals, which mean decreasing accounting quality, will increase ROA and vice-versa. In addition, the lag effect is analysed, as per Chan et al. (2004). When current performance is compared with the abnormal accruals of the previous year, results suggest that the reverse effect does not occur for two consecutive years.
    Keywords: Accounting quality, firm performance, abnormal accruals
    JEL: M41
    Date: 2011–02
  9. By: Jorge Martinez-Vazquez (International Studies Program. Andrew Young School of Policy Studies, Georgia State University); Violeta Vulovic (International Studies Program. Andrew Young School of Policy Studies, Georgia State University); Yongzheng Liu (International Studies Program. Andrew Young School of Policy Studies, Georgia State University)
    Abstract: The choice of the direct-indirect tax mix also is likely to have, as we review below, important consequences in other dimensions of the economy including macroeconomic stability, disparities in income distribution, and foreign direct investment flows. All those, including economic growth, will be revisited in this paper. There are several other potential effects of the choice of tax mix, including the impact on risk taking and entrepreneurship or taxpayers’ moral and voluntary tax compliance. As Atkinson (1977) points out, supposedly taxpayers may show preference for indirect taxation on the grounds that it offers them choice and some politicians may have similar preferences because indirect taxes may be perceived by the public as being less visible. None of these other possible effects will be explored further in this paper.
    Date: 2010–05–01
  10. By: Roy Bahl (Andrew Young School of Policy Studies, Georgia State University)
    Abstract: This paper is about the case for assigning taxing powers to subnational governments, and about the structure of this revenue assignment. As Musgrave (1983) put it in perhaps the seminal paper on this subject, “Who Should Tax, Where and What”? This review reconsiders the Musgrave questions after 25 years, asks whether the international trend in tax assignment is in step with what economists have prescribed, and concludes with some thoughts about the most likely future for the decentralization of tax systems.
    Date: 2010–05–01
  11. By: Stanely L. Winer (Carleton University, CESifo and ICER); Lawrence W. Kenny (University of Florida); Walter Hettich (California State University, Fullerton)
    Abstract: In this paper, we assess the contributions of current research in political economy to provide answers to these questions, while also presenting some new statistical results on the relation between tax structure and political regimes. Our discussion of the literature is selective and is empirically oriented. Our primary goal is to give a sense of some of the empirical research possibilities that lie ahead.
    Date: 2010–05–01

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