nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2012‒11‒11
eight papers chosen by
Alexander Harin
Modern University for the Humanities

  1. The tax and the mighty: Tax payer concentration lowers local business taxation in German Municipalities By Ivo Bischoff; Stefan Krabel
  2. Tax Evasion and Public Expenditures on Tax Collection Services in an Endogenous Growth Model By Sifis Kafkalas; Pantelis Kalaitzidakis; Vangelis Tzouvelekas
  3. The Hated Property Tax: Salience, Tax Rates, and Tax Revolts By Marika Cabral; Caroline Hoxby
  5. The effect of age-targeted tax credits on retirement behavior By Laun, Lisa
  6. Economic ideas and tax policy: The introduction of progressivity in tax systems in Western Europe. The cases of France and Spain By Javier San Julian Arrupe (Universitat de Barcelona)
  7. Tax Reform in Georgia and the Size of the Shadow Economy By Karine Torosyan; Randall K. Filer
  8. Towards a coherent European approach for taxation of combustible waste By Dubois, Maarten

  1. By: Ivo Bischoff (University of Kassel); Stefan Krabel (University of Kassel)
    Abstract: We analyze the impact of large firms on business tax rates using data from German mu-nicipalities in Hesse in 1998-2005. Results suggest that business tax rates decrease with tax-payers’ concentration, indicating strong local lobbying power of large firms.
    Keywords: tax competition, yardstick competition, local business taxation, large firms, Germany
    JEL: F1 F16 H2
    Date: 2012
  2. By: Sifis Kafkalas (University of Crete); Pantelis Kalaitzidakis (Dept of Economics, University of Crete, Greece); Vangelis Tzouvelekas (Department of Economics, University of Crete, Greece)
    Abstract: This paper analyzes the relationship between tax evasion and the two main policy instruments affecting evasion rates, namely, the announced tax rate and the share of tax revenues allocated to tax monitoring mechanisms. For doing so, we adopt a simple one-sector endogenous growth model modified under tax evasion following Roubini and Sala-i-Martin (1993) analysis on income taxes and tax evasion. Our model confirms Barro�s (1990) theoretical finding stating that the optimal tax rate is equal to the elasticity of private capital. However, when tax evasion matters to the social welfare, the effective tax rate is lower than the output elasticity in line with Futagami et al., (1993) and Turnovsky (1997) theoretical results. Our model is then calibrated using data from 145 developed and developing countries for 2011. Simulation results suggest that both tax evasion and output growth are decreasing with the share of tax revenues allocated to monitoring expenses, while welfare maximizing policies imply an announced tax rate lower from the elasticity of public capital and a share of monitoring expenses around 6.0%.
    Keywords: tax evasion, tax monitoring, effective tax rate, social loss.
    JEL: H21 H26 H54
    Date: 2012–04–26
  3. By: Marika Cabral; Caroline Hoxby
    Abstract: Because of the manner in which it is normally paid, the property tax is almost certainly the most salient major tax in the U.S. The property tax is also the least popular tax and the only major tax whose revenues have declined as a share of income. We hypothesize that high salience explains the unpopularity of the property tax, the level of the property tax, and prevalence of property tax revolts. To identify variation in the salience of the property tax over local jurisdictions and over time, we exploit conditionally random variation in tax escrow. Tax escrow is a method of paying the property tax that makes it much less salient–as we demonstrate using survey evidence. We find that areas in which the property tax is less salient are areas in which property taxes are higher and property tax revolts are less likely to occur. We present several specification tests, including spatial correlation tests and instruments based on bank branches, that suggest that our results are valid. An implication of our results is that voters facing a non-benevolent government may wish to keep taxes' salience high even if, as a result, they hate their highly salient taxes.
    JEL: B12 H2 H24 H3 H71 P16
    Date: 2012–11
  4. By: Christoph Farquet (Université de Lausanne)
    Abstract: The history of tax havens during the decades before World War II is still little known. To date, the studies that have focused on the 1920s and 1930s have presented either a very general perspective on the development of tax havens or a narrow national point of view. Based on unpublished historical archives of five countries (Switzerland, Great Britain, Belgium, France, Germany), this paper offers therefore a new comparative appraisal of international tax competition during this period in order to answer the following question: What was the specificity of the Swiss case – already considered a quintessential tax haven at the time – in comparison to other banking centres? The findings of this research study are twofold. First, the 1920s and 1930s appear as something of a golden age of opportunity for avoiding taxation through the relocation of assets. Most of the financial centres granted consistent tax benefits for imported capital, while the limited degree of international cooperation and the usual guarantee of banking secrecy in European countries prevented the taxation of exported assets. Second, within this general environment, the fiscal strategies of a tax haven like Switzerland differed from those of a great financial power like Great Britain. Whereas the Swiss administration readily placed itself at the service of the banking community, British policy was more balanced between the contradictory interests of the Board of Inland Revenue, the Treasury, and the English business circles.
    JEL: G15 F39 F53 H26 H71 N24 N44
    Date: 2012–10
  5. By: Laun, Lisa (IFAU - Institute for Evaluation of Labour Market and Education Policy)
    Abstract: This paper analyzes the effect of two age-targeted policy initiatives to delay retirement that were simultaneously implemented in Sweden in 2007: an earned income tax credit and a payroll tax credit. Both policies were targeted at workers aged 65 or above at the beginning of the tax year. The paper exploits that the special rules for elderly were governed by the year of birth while the social security system is governed by age retirement,i.e., the day of birth, in analyzing the effect of the new policies. The results suggest that the age-targeted tax credits increased employment in the year following the 65th birthday by 1.5 percentage points among individuals with annual earnings above the 2007 tax liability threshold three to five years earlier. An analysis of fiscal implications indicates, however, that the increase in employment was not large enough to offset the implied decrease in tax revenues.
    Keywords: Labor supply; retirement; earned income tax credit; payroll taxes
    JEL: H24 J14 J18 J21
    Date: 2012–10–15
  6. By: Javier San Julian Arrupe (Universitat de Barcelona) (Universitat de Barcelona)
    Abstract: In the last decade of the 19th century, the United Kingdom, France and Spain established progressive rates in their succession taxes. This paper compares the legislative processes that France and Spain countries followed in this matter. In both cases politicians arguments for and against progressive taxation were similar, and backed by well-known economic ideas and authors. The process in France was leaded by a majority of MPs believing that progressive taxes aided in the achievement of real justice in taxpaying. In Spain, there was not this majority, but the reform passed due to other circumstances. This would be one step in the application of new insights on tax fairness; however, proportionality as the right technique of taxation and government refrain from modifying distribution were still predominant.
    Keywords: parliament, public finance, inheritance tax, progressivity, political economy, liberalism
    JEL: K34 B12 N43 A11 H24
    Date: 2012
  7. By: Karine Torosyan (International School of Economics at TSU); Randall K. Filer (Hunter College)
    Abstract: This paper applies three different methods widely used in the literature to track changes in shadow economic activity in Georgia following a drastic tax reform in 2005. The first method is a currency demand approach based on macro level data. The second and third methods rely on micro data from household surveys. Overall, we find evidence that the amount of income underreporting decreased in the years following the reform. The biggest change is observed for households headed by a farmer, followed by “other” types of households where the head does not report any working status. Employed and self-employed households appear very similar before the tax reform and show minimal adjustment in income reporting in the post-reform period. Results, however, suggest that much of any difference may have come from increased enforcement efforts rather than rate changes.
    Keywords: hidden/shadow economy, tax reform, consumer behavior, transition economy
    JEL: E01 H26 J39
    Date: 2012
  8. By: Dubois, Maarten (KU Leuven, HUBrussel)
    Abstract: Although intra-European trade of combustible waste has grown strongly in the last decade, incineration and landfill taxes remain heterogeneous within Europe. A review of taxation schemes in North Western Europe shows that current heterogeneity does not constitute a level playing field for waste processing industries in different regions. The paper proposes a more coherent taxation strategy for Europe that is based on the principle of Pigovian taxation. The strategy aims to create a level playing field between European regions while reinforcing incentives for sustainable management of combustible waste. Three important policy recommendations emerge. First, integrating waste incineration into the European carbon Emissions Trading System (EU ETS) reduces the risk of tax competition between regions. Second, because taxation of every single air pollutant from waste incineration is cumbersome, a differentiated waste incineration tax based on NOx emissions can serve as a second-best instrument. Finally, in order to strengthen incentives for ash treatment, a landfill tax should apply for landfilled incineration residues. An example illustrates the coherence of the policy recommendations for incineration technologies with diverse environmental effects.
    Date: 2012–09

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