nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2012‒03‒21
seven papers chosen by
Alexander Harin
Modern University for the Humanities

  1. Tax competition and fiscal democracy By Genschel, Philipp; Schwarz, Peter
  2. Quantifying the role of federal and state taxes in mitigating wage inequality By Daniel H. Cooper; Byron F. Lutz; Michael G. Palumbo
  3. Tax and the city: A theory of local tax competition and evidence for Germany By Janeba, Eckhard; Osterloh, Steffen
  4. Debt, Taxes, and Banks By Ruud A. de Mooij; Michael Keen
  5. Analizando la determinación de impuesto a la renta y sus efectos sobre el crecimiento de la economía boliviana By Valdivia, Daney; Loayza, Lilian
  6. Financial Regulatory Harmonization in East Asia : Balancing Domestic and International Pressures for Corporate Governance Reforms By Richard W. Carney
  7. Documentation of the Tax-Benefit Microsimulation Model STSM: Version 2012 By Viktor Steiner; Katharina Wrohlich; Peter Haan; Johannes Geyer

  1. By: Genschel, Philipp; Schwarz, Peter
    Abstract: How does international tax competition affect fiscal democracy? To what extent does it constrain the autonomy of democratic governments in choosing the level and structure of national taxation? While tax competition has not reduced the level of total taxation in OECD-22 countries, it has revenue effects at the level of selected taxes, especially taxes falling on mobile tax bases such as the corporate tax or taxes on private capital income. The nominal tax burden has shifted from capital to labor and consumption (domestic redistribution). While this result suggests that tax competition has a negative effect on national tax autonomy, because all competing countries see their ability to tax mobile capital constrained, small countries see their capacity to raise revenue from mobile capital increased at the expense of large countries (international redistribution). Because of these countervailing effects, the overall effect on small countries is ambiguous. By contrast, the tax autonomy of large countries has unambiguously declined because international and domestic pressures work in the same direction. Given that governments have to meet mandatory spending requirements on the expenditure side this may have contributed to higher fiscal deficits in large countries. -- Die Arbeit untersucht, ob Steuerwettbewerb die Autonomie demokratisch legitimierter Regierungen einschränkt. Schränkt er ihre Fähigkeit ein, die Höhe und Struktur der Steuereinnahmen im Lichte der Wählerpräferenzen zu priorisieren? Eine solch pessimistische Einschätzung lässt sich nicht aufrechterhalten. Trotz Steuerwettbewerbs waren die Einnahmequoten in den OECD-Ländern in den letzten 30 Jahren weitgehend stabil. Jedoch beschränkt der Steuerwettbewerb die Optionen bestimmte Produktionsfaktoren zur Besteuerung heranzuziehen. Während bei der Körperschaftsteuer bzw. bei der Besteuerung von Kapitaleinkommen im Allgemeinen zusehends milder besteuert wird, verschiebt sich die Steuerstruktur verstärkt in Richtung immobiler Bemessungsgrundlagen, so dass eine Änderung der Steuerstruktur und folglich Umverteilungsprozesse innerhalb eines Nationalstaats ausgelöst werden. Diese innerstaatlichen Umverteilungsprozesse überlagern sich mit zwischenstaatlicher Umverteilung. Großen Ländern fällt es schwerer mit kleinen Ländern um mobile Bemessungsgrundlagen zu konkurrieren. Da auch in diesen Ländern ein Großteil der Ausgaben - zumindest kurzfristig - nicht disponibel ist, könnte ein Teil des Handlungsdrucks auf die Zukunft externalisiert worden sein, da größere Länder bis zum Ausbruch der Finanzkrise höhere Defizitquoten hatten als kleine Länder. Für kleine Länder lässt sich eine Einschränkung der Handlungsautonomie nicht zwingend konstatieren: Auf der einen Seite finden zwar auch in kleinen Länder innerstaatliche Umverteilungsprozesse hin zu Kapitaleinkommen statt; auf der anderen Seite erweitern kleine Länder wiederum ihren Spielraum, da sie (teilweise auf Kosten größerer Staaten) Kapitalzuflüsse verzeichnen und durch diesen Zufluss an Kapital wiederum Arbeitsplätze und Steuereinnahmen entstehen.
    Date: 2012
  2. By: Daniel H. Cooper; Byron F. Lutz; Michael G. Palumbo
    Abstract: Wage 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 wage 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 wage inequality substantially in all states. On average, taxes reverse approximately the last two decades of growth in wage inequality. Most of this compression of the income distribution is attributable to federal taxes. Nevertheless, there is substantial cross-state variation in the extent to which state tax policies compress the income distribution. 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 the mitigating influence of tax policy on wage inequality has increased very modestly since the early 1980s. The increase is due to the widening of the pre-tax wage distribution interacting with a progressive tax structure. In contrast, legislated tax changes over this period decreased income compression somewhat.
    Date: 2012
  3. By: Janeba, Eckhard; Osterloh, Steffen
    Abstract: Despite the well-developed empirical literature on local tax competition, little is known about the actual spatial structure of inter-municipal competition. Assuming that competition takes place only among neighbours (as in the empirical literature) is at odds with the theoretical approaches where all jurisdictions compete simultaneously. In this paper we use a survey conducted among mayors in the German state of Baden-Württemberg to show that the perceived intensity of competition for firms varies considerably between jurisdictions and can mainly be explained by the size and location of the jurisdiction. Based on these findings, we develop a sequential tax competition model in which urban centres compete with other urban centres and rural jurisdictions in their own neighbourhood. This model predicts that larger jurisdictions do not necessarily rely more on capital taxes; in case they face strong competition with more distant competitors, larger cities even have lower capital taxes. In addition, we discuss how the model compares to a standard simultaneous approach and show that results from our sequential model are in line with trends in local taxation in Baden-Württemberg. --
    Keywords: Local tax competition,survey,intensity of competition,asymmetric tax competition
    JEL: H71 H73 H77
    Date: 2012
  4. By: Ruud A. de Mooij; Michael Keen
    Abstract: Understanding the impact of the asymmetric tax treatment of debt and equity on the capital structures of financial institutions is critical to shaping and assessing responses to the problem of excessive leverage that underlay the 2009 financial crisis - but there is no empirical evidence to draw on. Guided by a simple model of banks‘ financing decisions in the presence of both regulatory constraints and tax asymmetries, this paper explores the impact of corporate tax bias on bank leverage, the use of hybrid instruments and regulatory capital ratios for a panel of over 14,000 commercial banks in 82 countries over nine years. On average, the sensitivity of banks‘ debt choices proves very similar to that of non-financial firms, consistent with rough offsetting of two opposing effects suggested by the theory. As the model predicts, somewhat counter-intuitively, the impact of tax on hybrids is generally weak or insignificant. Responsiveness to taxation varies significantly across banks, however: those holding smaller equity buffers, and larger banks, are noticeably less sensitive to tax.
    Keywords: Commercial banks , Corporate taxes , Debt , Economic models ,
    Date: 2012–02–10
  5. By: Valdivia, Daney; Loayza, Lilian
    Abstract: We compute the optimal income tax using the Quarterly Employment Survey 2010 and the model proposed by Kaplow (2008). The collection of optimal income taxes excludes 92% of people and it’s applied in the three stages; results show that 17% of income tax is optimal. The “optimal tax” is applied in a modified version of the model proposed by Valdivia and Montenegro (2008) in order to evaluate the redistribution effectiveness of consumption and its effects on economic growth. Results show that rule-of-thumb consumption raise 10.7% with a sacrifice of 4% of ricardian households and an increase of total consumption of 0.63% and economic growth, in the medium term, of 0.3% over its natural level. In the same way, fiscal spending raise and we can see positive effects on factor markets (employment and capital raises). Finally, according to the results showed we can see that welfare should be better because the introduction of the income tax causes intra and intergenerational redistribution across households.
    Keywords: income tax; dynamic stochastic general equilibrium model
    JEL: H21 E32
    Date: 2012–01–24
  6. By: Richard W. Carney (Asian Development Bank Institute (ADBI))
    Abstract: Is the harmonization of financial regulatory regimes possible in East Asia? Focusing on corporate governance, which many see as a critical part of the 1997 Asian financial crisis, and which is also seen as unresponsive to calls for change, this paper argues that such harmonization is possible, but that it will not be according to the “best practices†advocated by the International Monetary Fund, World Bank, Organisation for Economic Co-operation and Development, and other international organizations. At present, actors generally feign compliance with these international rules and standards. But this creates potential long-term problems by allowing distortions to persist and accumulate over time. By identifying the key actors that determine regulatory outcomes, this paper points to an alternative regulatory framework that would be adopted more comprehensively. This alternative framework is a compromise between the “best practices†advocated by international organizations, and the domestic political realities of East Asia.
    Keywords: Financial Regulatory Harmonization, East Asia, Corporate Governance Reforms, Corporate governance
    JEL: G32 G34 G38 P48
    Date: 2011–03
  7. By: Viktor Steiner; Katharina Wrohlich; Peter Haan; Johannes Geyer
    Date: 2012

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