nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2012‒03‒28
eight papers chosen by
Alexander Harin
Modern University for the Humanities

  1. A New Fiscal Pact, Tax Policy Changes and Income Inequality By Cornia, Giovanni Andrea; Martorano, Bruno
  2. A Way Forward for State Taxation of E-Commerce By Gamage, David; Heckman, Devin
  3. Financial Transaction Tax Contributes to More Sustainability in Financial Markets By Dorothea Schäfer
  4. Tax Structure and Entrepreneurship By Mina Baliamoune-Lutz; Pierre Garello
  5. A Note on Automatic Stabilizers in Austria: Evidence from ITABENA By Helmut Hofer; Tibor Hanappi; Sandra Müllbacher
  6. The Costs of VAT: A Review of the Literature By Luca Barbone; Richard Bird; Jaime Vázquez Caro
  7. Decentralized Deterrence, with an Application to Labor Tax Auditing By Di Porto, Edoardo; Persico, Nicola; Sahuguet, Nicolas
  8. Consistent Valuation Cash Flow By Uzi Yaari; Andrei Nikiforov; Emel Kahya; Yochanan Shachmurove

  1. By: Cornia, Giovanni Andrea; Martorano, Bruno
    Abstract: The paper analyses the changes in tax policy, tax/GDP ratios, tax incidence and income inequality which have taken place in Latin America during the last decade against the background of the changes observed in these variables during the liberal years of the 1980s and 1990s. The paper argues that the recent tax policy changes and a favourable external environment led to an increase of about three points in the regional tax/GDP ratio, that such increase in taxation took place in a slightly or substantially more progressive way than in the past, that the Gini coefficient of the distribution of household income improved on average by 0.4-0.8 points, and that, as a result, redistribution via taxation improved (especially in the Southern Cone) in relation to the 1990s thanks to greater reliance on direct taxes and a reduction in excises. However, in the mid-late 2000s taxation remains unequalizing in about a third of the countries of the region, especially in Central America. The paper concludes by offering recommendations on how the new fiscal pact evolving in the region can be strengthened to improve the redistributive effect of taxation in the years ahead.
    Keywords: tax policy, tax incidence, income inequality, redistribution, fiscal exchange, Latin America
    Date: 2011
  2. By: Gamage, David; Heckman, Devin
    Abstract: We propose a novel solution for states that wish to tax interstate e-commerce based on fully and adequately compensating remote vendors for all tax compliance costs. We argue that our proposed solution is compatible with the Quill framework for when states can constitutionally impose burdens on remote vendors. We argue that unlike our proposed solution, the recent state attempts to tax interstate e-commerce through so-called “Amazon laws†are unconstitutional, ineffective, or both. We thus urge the states to adopt our proposed approach as the best way forward for state taxation of interstate e-commerce.
    Keywords: Constitutional Law, Legislation, Public Law and Legal Theory, State and Local Government Law, Taxation, Taxation-State and Local, Taxation-State and Local
    Date: 2011–08–21
  3. By: Dorothea Schäfer
    Abstract: We argue that a financial transaction tax complements financial market regulation. With the tax, governments have an additional instrument at hand to influence trading activity. FTT aims to reduce regulatory arbitrage, flash trading, overactive portfolio management, excessive leverage and speculative transactions of financial institutions. The focus clearly addresses these classes of activities that have contributed to the financial crisis. However, if contrary to expectations harmful transactions will not be curbed, FFT generates at least large tax revenues that can contribute to cover the costs of the financial crisis. The trend towards centralized clearing and depositaries makes tax evasion more difficult than it was in the past. Tax avoidance is, of course, never completely avoidable. Therefore the effect of the tax should be monitored closely so that governments can react quickly if tax loopholes and taxinduced geographical relocation plans of financial institutions come to light.
    Keywords: Financial stability, transaction tax, public good, central depository
    JEL: G20 G24 G28
    Date: 2012
  4. By: Mina Baliamoune-Lutz (Department of Economics, University of North Florida); Pierre Garello (CERGAM-CAE, Aix-Marseille Université)
    Abstract: Using macro-level panel data, we examine the effects of taxation and tax progressivity on entrepreneurship in a large group of European countries. We address two main objectives. First, we try to explore whether tax increases discourage entrepreneurial activity, distinguishing between the effects on existing self-employment and new self-employment (nascent entrepreneurship). Second, we investigate the impact of tax progressivity on entrepreneurship, focusing in particular on the impact on new self-employment. We find that tax progressivity at higher-than-average incomes has a robust negative effect on nascent entrepreneurship. We discuss on the policy implications of our results.
    Date: 2011–07
  5. By: Helmut Hofer; Tibor Hanappi (Institut für Höhere Studien (IHS) / Department of Economics & Finance); Sandra Müllbacher (Institut für Höhere Studien (IHS) / Department of Economics & Finance)
    Abstract: In the Great Recession market income of the households in Austria has been reduced and unemployment increased. In this paper we examine the impact of automatic stabilizers on cushioning such income losses. We use ITABENA, an Austrian tax-benefit model, to analyze how shocks on market income and employment are mitigated by taxes and transfers. In the case of a proportional income shock 46 percent of the shock will be absorbed by automatic stabilizers in Austria. For the unemployment shocks automatic stabilizers absorb 68 percent. Automatic stabilizers increase the redistributive effects of the Austrian tax benefit system. We find that recent changes in the income tax code have almost no impact on the size of automatic stabilizers in Austria.
    Keywords: automatic stabilization, microsimulation, tax reforms
    JEL: E32 E63 H2 H31
    Date: 2012–03
  6. By: Luca Barbone; Richard Bird; Jaime Vázquez Caro
    Abstract: This paper reviews the published literature on the definition and measurement of the administrative and compliance costs of taxation, with special reference to VAT (including evasion and fraud) in the European Union.
    Keywords: Taxation, Subsidies, Revenue
    JEL: H20 H21 H25 H26 M48
    Date: 2012
  7. By: Di Porto, Edoardo; Persico, Nicola; Sahuguet, Nicolas
    Abstract: Deterrence of illegal activities is frequently carried out by many atomistic auditors (tax auditors, law enforcement agents, etc.). Not much is known either normatively about the best way to incentivize atomistic auditors, nor positively about what these incentives actually look like in real world organizations. This paper focuses almost exclusively on the positive question. It proposes a game-theoretic model of decentralized deterrence and an empirical test, based on the equilibrium of the model, to identify the incentives of individual auditors. In the special (but important) case of tax enforcement, the paper fully characterizes the equilibrium of a strategic auditing game and provides a method to calibrate its parameters based on audit data. Applying the model and method to Italian auditing data provides ‘proof of concept’: the methods are practical and tractable. We are able to provide an estimate of tax evasion based on (non-random) audit data alone. Counterfactual simulation of the model quantifies the costs and benefits of alternative auditing policies. We compare decentralized enforcement with a counterfactual commitment policy, and compute the loss from the former. Thus we are able to quantify the costs of decentralizing enforcement.
    Keywords: audits; deterrence; tax evasion
    JEL: H26 H83 K42
    Date: 2012–03
  8. By: Uzi Yaari (Rutgers School of Business, Camden, NJ); Andrei Nikiforov (Rutgers School of Business, Camden, NJ); Emel Kahya (Rutgers School of Business, Camden, NJ); Yochanan Shachmurove (City College and Graduate Center of the City University of New York)
    Abstract: This paper seeks to draw attention to a flaw in the Free Cash Flow model and related statement widely accepted in Corporate Finance. We argue that the offset of any Current Liabilities against Current Assets distorts the FCF size, composition and volatility, thereby misstating the firm or project size, debt and assets composition, financial leverage, risk profile, and estimated value. As viewed by the firm’s debt and equity suppliers, an arbitrary offset means an ambiguous distortion in those parameters. We demonstrate empirically that the offset opens opportunities to systematically overstate the FCF and understate its volatility. We propose to reverse the offset and rename the standardized statement "Valuation Cash Flow" (VCF)
    Keywords: Financial Reporting, Free Cash Flow, Net Working Capital, Cost of Capital,Corporate Valuation
    JEL: G30 G31 G32 G35 G38 H32 K22 L21 M14 M40 M41
    Date: 2012–03–15

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