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on Accounting and Auditing |
| By: | Ojo, Marianne |
| Abstract: | This paper is aimed at providing a comprehensive overview of, and responses to, four very vital components of the consultative processes which have contributed to the new framework known as Basel III. The paper will approach these components in the order of the consultative processes, namely, the capital proposals, the liquidity proposals and the Proposal to ensure the loss absorbency of regulatory capital at the point of non-viability. The capital proposals comprise proposals aimed at strengthening the resilience of the banking sector, the proposal relating to international framework for liquidity risk measurement, standards and monitoring and, the countercyclical capital buffer proposal. Whilst the capital proposals have been welcomed, there has been growing realisation since the aftermath of the recent Financial Crises that banks which have been complying with capital adequacy requirements could still face severe liquidity problems. As well as highlighting the importance of introducing counter cyclical capital buffers, the response to the countercyclical proposal draws attention to the need for greater focus on more forward looking provisions, as well as provisions which are aimed at addressing losses and unforeseen problems attributed to “maturity transformation of short-term deposits into long term loans.” The Basel Committee’s consultative document on the “Proposal to Ensure the Loss Absorbency of Regulatory Capital at the Point of Non Viability” sets out a proposal aimed at “enhancing the entry criteria of regulatory capital to ensure that all regulatory capital instruments issued by banks are capable of absorbing losses in the event that a bank is unable to support itself in the private market.” Amongst other issues addressed, the response to the consultative document highlights why the controlled winding down procedure also constitutes a means whereby losses could still be absorbed in the event that a bank is unable to support itself in the private market. |
| Keywords: | Counter cyclical buffers; liquidity risks; pro cyclicality; loan loss provisions; financial crises; bank; regulation; capital; insolvency; financial crises; moral hazard; Basel III |
| JEL: | K2 G21 E3 |
| Date: | 2010–10 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:32869&r=acc |
| By: | Jacob, Martin (Uppsala Center for Fiscal Studies) |
| Abstract: | This paper analyzes the effects of progressive versus proportional taxation on capital gains realization behavior. Using a comprehensive panel of over 230,000 individuals in Sweden for 1973-1996, this paper shows after progressive capital gains taxes were cut from over 80% in the 1980s to a proportional tax rate of 30% in 1991, especially high-income taxpayers increased capital gains realizations. The reaction to the introduction of the proportional capital gains tax rate is more pronounced among younger individuals. This paper also shows that under a progressive (proportional) tax regime, investors with excess income are less (more) likely to realize capital gains than individuals with liquidity constraints. Hence, proportional versus progressive taxation plays an important role in capital gains realizations of private investors. |
| Keywords: | Capital Gains Tax; Proportional Tax; Progressive Tax; Top Incomes; Life-Cycle |
| JEL: | D14 D31 H20 H24 |
| Date: | 2011–08–09 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:uufswp:2011_009&r=acc |
| By: | John Brondolo |
| Abstract: | This paper considers how a tax on financial transactions could be applied to three broad and partially overlapping categories of financial instruments: (1) exchange-traded instruments; (2) over-the-counter instruments; and, (3) foreign exchange instruments. For each category, the paper examines the factors that would facilitate or complicate the administration of a financial transactions tax, the options for collecting the tax, the types of compliance risks that are likely to be encountered, and measures for mitigating these risks. |
| Date: | 2011–08–04 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:11/185&r=acc |
| By: | Gaowang Wang (School of Economics and Management, Wuhan University); Heng-fu Zou (CEMA, Central University of Finance and Economics; China School of Advanced Study (SAS), Shenzhen University; IAS, Wuhan University; GSM, Peking University) |
| Abstract: | The optimal inflation tax is reexamined in the framework of dynamic second best economy populated by individuals with inflation aversion. A simple formula for the optimal inflation rate is derived. Different from the literature, it is shown that if the marginal excess burden of other distorting taxes approaches zero, Friedman's rule for optimum quantity of money is not optimal, and the optimal inflation tax is negative; if the marginal excess burden of other taxes is nonzero, the optimal inflation rate is indeterminate and relies on the tradeoffs between the impatience effect of inflation and the effects of other economic forces in the monetary economy. |
| Keywords: | Inflation aversion, Optimal inflation tax, Second best taxation, The friedman rule |
| JEL: | E31 E41 E52 H21 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:cuf:wpaper:480&r=acc |
| By: | Bargain, Olivier (University College Dublin); Dolls, Mathias (University of Cologne); Immervoll, Herwig (World Bank); Neumann, Dirk (University of Cologne); Peichl, Andreas (IZA); Pestel, Nico (IZA); Siegloch, Sebastian (IZA) |
| Abstract: | We assess the effects of U.S. tax policy reforms on inequality by applying a new decomposition method that allows us to disentangle mechanical effects due to changes in pre-tax incomes from direct effects of policy reforms. While tax reforms implemented under Democrat administrations, in particular the EITC reforms in the 1990s and the ARRA in 2009, had an equalizing effect at the lower half of the distribution, the disequalizing effects of Republican reforms are due to tax cuts for high-income families. As a consequence of partisan politics, overall policy effects almost cancel out over the whole time period. |
| Keywords: | tax policy, inequality, redistribution, political economy, Great Recession |
| JEL: | H23 H31 H53 P16 |
| Date: | 2011–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp5910&r=acc |
| By: | Amnon Levy (University of Wollongong) |
| Abstract: | The responsibility for, and consequences of, greenhouse gas emissions are shared by all countries, but only a few are willing to tax emissions. The paper argues that the reactions of the abstaining countries are crucial for assessing the effectiveness of the tax. The paper analyzes an interaction between a tax-collecting and investing coalition of rich countries, abstaining rich countries and poor countries. The non-coalition countries might have loss of reputation and guilt and overstate the tax’s emission-moderating effect. As long as these three types of countries react to their counterparts’ emissions, taxing emissions does not necessarily reduce the global emissions. |
| Keywords: | Emission Tax; Abstinence; Understating Expectations; Guilt; Global Emissions |
| JEL: | Q52 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:uow:depec1:wp11-01&r=acc |
| By: | Besley, Timothy J.; Ghatak, Maitreesh |
| Abstract: | We explore the consequence for taxation and regulation of bonus pay when investors are protected by taxpayers from downside risk. The paper develops a model where workers in financial sector firms make decisions about effort and risk-taking which are influenced by the structure of bonus pay. Bailouts lead to too little effort, too much risk taking and increase inequality. We show that the optimal structure of bonuses can be implemented by a combination of a regulation on the structure of bonuses and a tax on their level. |
| Keywords: | bonus; incentives; taxation |
| JEL: | D53 D86 H21 |
| Date: | 2011–08 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:8532&r=acc |
| By: | Qian Wang (School of Public & Environmental Affairs (SPEA) Indiana University Bloomington); Chunli Shen (Central University of Finance and Economics); Heng-fu Zou (Shenzhen University, Wuhan University and Central University of Finance and Economics) |
| Abstract: | This paper aims to enhance the understanding of provincial tax performance in China, paying special attention to the recent fiscal reforms in the 1980s and in 1994. Using provincial panel data for the period 1986-2004, our analysis consists of two steps. First, a combined fixed time effects and random provincial effects model is used to analyze the statistical relationship between the tax share in GDP and economic and demographic variables. Results indicate that the decentralized fiscal system over the period 1986¨C1993 has had a positive impact on the tax share in GDP, whereas the recentralized fiscal system in the period 1994-2004 has had a negative impact. Second, provincial tax effort indices are calculated to estimate potential room for additional taxation. The findings from the analysis have important policy implications on the redistribution of fiscal resources as well as on the effectiveness of the tax administration. |
| Keywords: | Tax effort, Tax capacity, Fiscal reforms, Fiscal decentralization |
| JEL: | H20 H71 C23 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:cuf:wpaper:483&r=acc |
| By: | Liutang Gong (Guanghua School of Management, Peking University; Institute for Advanced Study, Wuhan University); Heng-fu Zou (Guanghua School of Management, Peking University; Institute for Advanced Study, Wuhan University; Development Research Group, The World Bank) |
| Abstract: | This paper extends the Barro (1990) growth model with one aggregate government spending and one flat income tax to include federal and local public consumption, federal and local public capital formation, federal and local taxes, and federal transfers to locality. It derives the rate of endogenous growth and examines how the growth rate and welfare respond to changes in federal taxes, local taxes, and federal transfers. |
| Keywords: | Fiscal federalism, Public expenditures, Public capital, Taxes, Federal transfers, Endogenous growth |
| JEL: | E0 G1 H0 O0 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:cuf:wpaper:488&r=acc |