nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2011‒11‒07
seventeen papers chosen by
Alexander Harin
Modern University for the Humanities

  1. The Effects of Tax Salience and Tax Experience on Individual Work Efforts in a Framed Field Experiment By Fochmann, Martin; Weimann, Joachim
  2. What is a "Competitive" Tax System? By Stephen Matthews
  3. Effective taxation of top incomes in Germany By Bach, Stefan; Corneo, Giacomo; Steiner, Viktor
  4. Making Fundamental Tax Reform Happen By Bert Brys
  5. Quantifying the role of federal and state taxes in mitigating income inequality By Daniel H. Cooper; Byron F. Lutz; Michael G. Palumbo
  6. Tax Reform Trends in OECD Countries By Bert Brys; Stephen Matthews; Jeffrey Owens
  7. The capital gains tax: A curse but also a blessing for venture capital investment By Achleitner, Ann-Kristin; Bock, Carolin; Watzinger, Martin
  8. The impact of vacant, tax-delinquent, and foreclosed property on sales prices of neighboring homes By Stephan Whitaker; Thomas J. Fitzpatrick IV
  9. Corporate Taxation and SMEs: The Italian Experience: The Italian Experience By Marco Manzo
  10. Public Expenditures, Taxes, Federal Transfers, and Endogenous Growth By Liutang Gong; Heng-fu Zou
  11. Taxation and Labor Force Participation: The Case of Italy By Fabrizio Colonna; Stefania Marcassa
  12. Wage Income Tax Reforms and Changes in Tax Burdens: 2000-2009 By Bert Brys
  13. Steuervergünstigungen in Deutschland 2005–2012 By Alfred Boss
  14. Why Taxing Executives' Bonuses Fosters Risk-taking Behavior By Martin Grossmann; Markus Lang; Helmut Dietl
  15. Non-Tax Compulsory Payments as an Additional Burden on Labour Income By Bert Brys
  16. Consumption Taxation as an Additional Burden on Labour Income By Fidel Picos-Sánchez
  17. Financing of Public Goods through Taxation in a General Equilibrium Economy: Theory and Experimental Evidence By Juergen Huber; Martin Shubik; Shyam Sunder

  1. By: Fochmann, Martin (University of Magdeburg); Weimann, Joachim (University of Magdeburg)
    Abstract: We conduct a framed field experiment with 245 employed persons (no students) as subjects and a real tax, which is levied on the subjects' income from working in our real effort task. In our first three treatments, the net wage is constant but gross wages are subject to different constant marginal tax rates (0, 25%, 50%). It turns out that the effort is significantly higher under the tax than in the no tax treatment. Subjects perceive a too high net wage because they underestimate the tax. We conjecture that tax perception depends on the tax rate, the presentation of the tax and the experience subjects have with taxation. These conjectures are confirmed in four further treatments employing a direct and an indirect progressive tax scale. It turns out that simple at taxes are particularly prone to being misperceived because their simplicity reduces the tax salience.
    Keywords: field experiment, real effort experiment, tax perception, tax salience, tax experience, behavioral economics
    JEL: C91 D14 H24
    Date: 2011–10
  2. By: Stephen Matthews
    Abstract: This paper considers how tax policy and administration impact on an economy’s competitiveness and reviews various measures of ‘tax competitiveness’.
    Date: 2011–11–03
  3. By: Bach, Stefan; Corneo, Giacomo; Steiner, Viktor
    Abstract: We exploit an exhaustive administrative dataset that includes the individual tax returns of all households in the top percentile of the income distribution in Germany to pin down the effective income taxation of households with very high incomes. Taking tax base erosion into account, we find that the top percentile of the income distribution pays an effective average tax rate of 30.5 percent and contributes more than a quarter of total income tax revenue. Within the top percentile, the effective average tax rate is first increasing and then decreasing with income. Since the 1990s, effective average tax rates for the German super rich have fallen by about a third, with major reductions occurring in the wake of the personal income tax reform of 2001-2005. As a result, the concentration of net incomes at the very top of the distribution has strongly increased in Germany. --
    Keywords: personal income tax,taxing the rich,effective progressivity
    JEL: H24 H26 D31
    Date: 2011
  4. By: Bert Brys
    Abstract: This paper discusses the objectives of tax reform and explores the most important environmental factors that influence the reform process, focusing on the circumstances that explain when these objectives and environmental factors may become an obstacle to the design and implementation of tax policies. The second part of this paper discusses strategies that might help policy makers to successfully implement fundamental tax reforms.
    Date: 2011–11–03
  5. By: Daniel H. Cooper; Byron F. Lutz; Michael G. Palumbo
    Abstract: Income inequality has risen dramatically in the United States since at least 1980. This paper quantifies the role that the tax policies of the federal and state governments have played in mitigating this income inequality. The analysis, which isolates the contribution of federal taxes and state taxes separately, employs two approaches. First, cross-sectional estimates compare before-tax and after-tax inequality across the 50 states and the District of Columbia. Second, inequality estimates across time are calculated to assess the evolution of the effects of tax policies. The results from the first approach indicate that the tax code reduces income inequality substantially in all states, with most of the compression of the income distribution attributable to federal taxes. Nevertheless, there is substantial cross-state variation in the extent to which state tax policies compress the income distribution attributable to federal taxes. Cross-state differences in gasoline taxes have a surprisingly large impact on income compression, as do sales tax exemptions for food and clothing. The results of the second approach indicate that there has been little change since the early 1980s in the impact of tax policy on income inequality across almost all states.
    Keywords: Income distribution ; Taxation
    Date: 2011
  6. By: Bert Brys; Stephen Matthews; Jeffrey Owens
    Abstract: Over the last two decades almost all OECD countries have made major structural changes to their tax systems. In the case of the personal and corporate income tax regimes reforms have generally been rate reducing and base broadening, following the lead given by the United Kingdom in 1984 and the United States in 1986. In some countries, including Australia and New Zealand, reforms have been profound and sometimes implemented over a very short period of time. In others, including most of Europe, Japan and many other Asian countries, reform has been a gradual process of adaptation.
    Date: 2011–11–03
  7. By: Achleitner, Ann-Kristin; Bock, Carolin; Watzinger, Martin
    Abstract: This article documents a statistical association between the number and success of venture capital investments and the capital gains tax rate. To do this, we analyze investment data and taxes of 32 countries from 2000 to 2010. In our data, higher capital gains tax rates are associated with fewer firms financed and a lower probability for ventures receiving follow-up funding. However, if the first investment is received when taxes are high, the probability of a firm eventually going public or being acquired increases. We conclude that high tax rates are associated with fewer, but on average more successful companies. --
    Keywords: capital gains tax,venture capital,investment
    JEL: G24 H25 H32
    Date: 2011
  8. By: Stephan Whitaker; Thomas J. Fitzpatrick IV
    Abstract: In this empirical analysis, we estimate the impact of vacancy, neglect associated with material property-tax delinquency, and foreclosures on the value of neighboring homes using parcel-level observations. To our knowledge, this is only the second study which estimates the impact of vacancy itself and the first to estimate the impact of tax-delinquent properties on neighboring home sales.
    Keywords: Foreclosure ; Housing - Prices
    Date: 2011
  9. By: Marco Manzo
    Abstract: This paper focuses on the tax impediments faced by small and medium-sized enterprises in Italy. The fact that small businesses are characterized by financing constraints and have less access to bank loans is often emphasized as an argument in favour of a special tax treatment for small enterprises. On the one hand, however, the evidence that SMEs suffer severe financing constraints is not overwhelming; on the other hand, tax relief for SMEs is not necessarily the best response to financial market imperfections.
    Date: 2011–11–03
  10. By: Liutang Gong (Guanghua School of Management, Peking University); Heng-fu Zou (CEMA, Central University of Finance and Economics; Shenzhen University; Wuhan University; The World Bank)
    Abstract: This paper extends the Barro (1990) model with single aggregate government spending and one flat income tax to include public expenditures and taxes by multiple levels of government. It derives the rate of endogenous growth and, with both simulations and special examples, examines how that rate changes with respect to federal income tax, local taxes, and federal transfers. It also discusses the growth and welfare-maximizing choices of taxes and federal transfers.
    Keywords: Public expenditures, Taxes, Federal transfers, Endogenous growth
    JEL: E0 H2 H4 H5 H7 O4 R5
    Date: 2011
  11. By: Fabrizio Colonna (Banca d'Italia); Stefania Marcassa (Paris School of Economics)
    Abstract: Italy has the lowest labor force participation of women among OECD countries. Moreover, the participation rate of married women is positively correlated to their husbands' income. We show that a high tax schedule together with tax credits and transfers raise the burden of two-earner households, generating disincentives to work. We estimate a structural labor supply model for women, and use the estimated parameters to simulate the effects of alternative revenue-neutral tax systems. We find that joint taxation implies a drop in the participation rate. Conversely, working tax credit and gender-based taxation boost it, with the effects of the former concentrated on low educated women.
    Keywords: female labor force participation, Italian tax system, marginal tax rate, joint taxation, gender-based taxation, working tax credit
    Date: 2011–07
  12. By: Bert Brys
    Abstract: The tax burden on labour and its evolution over time are issues that feature prominently in the political debate. Averaged across the OECD, personal income taxes, social security contributions and payroll taxes together account for more than 51% of total government revenues in 2008 (OECD, 2010). With tax burdens differentiated by earnings level and family situation, they serve a central role as redistribution policies. Importantly, by shaping both work incentives and the cost of labour, the level and structure of these taxes are major influences on the functioning of labour markets...
    Date: 2011–11–03
  13. By: Alfred Boss
    Abstract: Tax expenditures are granted for a variety of purposes in Germany. The paper presents data on the extent and the structure of the tax expenditures in the period 2005 to 2012. Tax expenditures will be reduced somewhat in the period 2005–2012. They should be cut further in order to increase economic welfare
    Keywords: Steuervergünstigungen, Subventionsabbau
    JEL: H24 H25
    Date: 2011–10
  14. By: Martin Grossmann (Institute for Strategy and Business Economics, University of Zurich); Markus Lang (Institute for Strategy and Business Economics, University of Zurich); Helmut Dietl (Institute for Strategy and Business Economics, University of Zurich)
    Abstract: Bonus taxes have been implemented to prevent managers from excessive risk-taking. This paper analyzes the effects of taxing executives' bonuses in a principal-agent model. Our model shows that unintentionally the introduction of a bonus tax intensifies the manager's risk-taking behavior and decreases the manager's effort. The principal responds to a bonus tax by offering the manager a higher fixed salary but a lower incentive-based salary.
    Keywords: Principal-agent model, bonus tax, risk-taking, executive compensation, financial regulation
    JEL: H24 J30 M52
    Date: 2011–10
  15. By: Bert Brys
    Abstract: In 23 of the 34 OECD member countries, it is compulsory for employers and/ or employees to make additional payments, in addition to taxes and social security contributions, which increase the overall burden on labour income. These non-tax compulsory payments, which are typically paid to privatelymanaged funds, will either increase the employer’s labour costs or reduce the employee’s net take-home pay in a similar way to taxes, although they do not necessarily have the same behavioural impact. This paper discusses the different non-tax compulsory payments levied in OECD member countries and calculates “compulsory payment indicators”, which combine non-tax compulsory payments and taxes into an overall indicator of the burden of compulsory government regulation on labour income. The analysis shows that especially employers have to pay non-tax compulsory payments and that they have a considerable impact on the “tax wedge” rankings that are published in the OECD’s Taxing Wages Report.<P>Les prélèvements obligatoires non fiscaux comme charge additionnelle sur les revenus du travail<BR>Dans 23 des 34 pays membres de l’OCDE, les employeurs et/ou leurs salariés sont tenus d’effectuer des paiements qui ne sont pas définis comme des impôts et cotisations de sécurité sociale et qui alourdissent la charge globale qui pèse sur les revenus du travail. Ces « prélèvements obligatoires non fiscaux », généralement effectués au profit de fonds à gestion privée, ont pour effet d’accroître les coûts de main-d’oeuvre de l’employeur ou de réduire le revenu net disponible du salarié de la même manière que des impôts, bien qu’ils n’aient pas nécessairement les mêmes effets en termes de comportement. Ce document examine les différents prélèvements obligatoires non fiscaux en vigueur dans les pays membres de l’OCDE et calcule des « indicateurs de prélèvements obligatoires », qui combinent les impôts et les prélèvements obligatoires non fiscaux dans un indicateur d’ensemble de la charge sur les revenus du travail induite par la réglementation publique. L’analyse montre que ce sont surtout les employeurs qui sont soumis à des prélèvements obligatoires non fiscaux qui ont des répercussions très sensibles sur le classement du « coin fiscal » publié dans le rapport de l’OCDE intitulé « Les impôts sur les salaires ».
    Keywords: taxes, non-tax compulsory payments, labour income, effective tax rates, impôt, prélèvements obligatoires non fiscaux, revenus du travail, taux effectifs d’imposition
    Date: 2011–11–03
  16. By: Fidel Picos-Sánchez
    Abstract: The OECD’s Taxing Wages (TW) Report1 provides details of taxes paid on wages in the 34 OECD member countries. In particular, it covers the personal income tax and social security contributions paid by employees and their employers, as well as cash benefits received by families. The Report calculates the average and marginal tax burden on labour income for taxpayers at different income levels and with different family characteristics (single taxpayers and married couples with or without children). The aim of this paper is to explore the possible consequences of broadening the TW model by introducing consumption taxes, and so include the taxes that workers pay when they spend their wages in addition to the taxes that are paid when they earn them. This has been done by using micro data from Household Budget Surveys provided by several OECD countries and Eurostat, to simulate consumption taxes for families with similar characteristics to the eight types defined in Taxing Wages.
    Date: 2011–11–03
  17. By: Juergen Huber (University of Innsbruck); Martin Shubik (Cowles Foundation, Yale University); Shyam Sunder (Yale School of Management)
    Abstract: We compare general equilibrium economies in which building and maintenance of a depreciating public facility is financed either by anonymous voluntary contributions or by taxing agents on their income from private production. Agents start with an endowment of private goods and money, while the government starts with an endowment of public good and money. All private goods produced are tendered for sale in exchange for money in a sell-all market mechanism. Agents' proceeds from sale are taxed, and they individually allocate their private goods between current consumption and investment in production for the following period. The optimal levels of supply of the public good, and tax rate to sustain it over time, are defined and calculated for infinite and finite horizons. These equilibrium theoretical predications are compared to the outcomes of laboratory economies when (1) the starting public facility is either at or below the optimal level; and (2) the tax rate is either exogenously set at the optimal level, or at the median of rates proposed by individual agents. We find that the experimental economies sustain public goods at about 70-90 percent of the infinite horizon but considerably more than the finite horizon optimum. Payoffs (efficiency) is at 90 percent of the infinite horizon equilibrium level even when the rate of taxation is determined by voting. Starting conditions play only a minor role for outcomes of the economies, as efficiency and the stock of public good adjusts to about the same level irrespective of the starting level. These results contrast with rapid decline in provision of public goods under anonymous voluntary contributions, and point to the possibility that the social institution of government enforced taxation may have evolved to address the problem of under-production of public goods through anonymous voluntary contributions.
    Keywords: Public goods, Experimental gaming, Voting, taxation, Evolution of institutions
    JEL: C72 C91 C92
    Date: 2011–10

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