nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2012‒11‒17
nine papers chosen by
Alexander Harin
Modern University for the Humanities

  1. Taxation trends in the European Union: 2012 edition By European Commission
  2. Capital Income Taxation and the Mirrlees Review By Patricia Apps; Ray Rees
  3. Estimating the Federal Direct Tax Buoyancy for Pakistan in Post-1973 Era By Shaikh, Salman
  4. Mitigating shareholder taxation in small open economies? By Jacob, Martin; Södersten, Jan
  5. From Regressive Pollution Taxes to Progressive Environmental Tax Reforms By Mireille Chiroleu-Assouline; Mouez Fodha
  6. The Impact of the Business Cycle on Elasticities of Tax Revenue in Latin America By Roberto Machado; José Zuloeta
  7. Optimal Labor Income Taxation By Thomas Piketty; Emmanuel Saez
  8. Structural Progression Measures for Dual Income Tax Systems By Arnaldur Sölvi Kristjánsson; Peter J. Lambert
  9. International Taxation and Cross-Border Banking By Harry Huizinga; Johannes Voget; Wolf Wagner

  1. By: European Commission
    Abstract: This is the sixth issue of 'Taxation Trends in the European Union', an expanded and improved version of a previous publication, 'Structures of the taxation systems in the European Union'. The objective of the report remains unchanged: to present a complete view of the structure, level and trends of taxation in the Union over a medium- to long-term period.
    Keywords: European Union, taxation
    JEL: H23 H24 H25 H27 H71
    Date: 2012–06
  2. By: Patricia Apps; Ray Rees
    Abstract: The Mirrlees Review of the UK tax system, together with its companion volume of research papers, can be expected to influence future discussions of tax reform. Indeed, this can already be recognised in the Henry Review. As far as income taxation is concerned, the most substantive recommendation of the Mirrlees Review is a move toward a system of consumption or expenditure taxation, by exempting the "normal return to saving and taxing only "excess returns on the same tax schedule as labour earnings. This paper argues against this direction of reform on the grounds that it is based on a model of household behaviour over the life cycle that ignores important aspects of reality. We present an alternative model, together with supporting empirical evidence. We go on to argue that, against the background of rising inequality and an aging population, the appropriate direction for reform is towards more progressive taxation of both labour earnings and capital income, although not necessarily under the same rate scale.
    Keywords: Optimal taxation, labour supply, capital income taxation, family life cycle, time allocation, saving, inequality
    JEL: H21 H24 H31 D13 D91 J22
    Date: 2012–11
  3. By: Shaikh, Salman
    Abstract: This study used the simple co-integration technique to estimate the direct tax buoyancy for Pakistan economy for the 36 year period starting from FY-1974 to FY-2009. The buoyancy estimated was more than unity which represents slight improvement over previous estimates in past studies. The study attributes the improvement to factors such as expansion of tax base, diversification and deepening of manufacturing sector and structural change in the economy with the size of agriculture sector output shrinking as proportion of GDP and the proportion of direct tax increasing in proportion to total taxes gradually. The study recommends certain policy recommendations which include increase in tax base, reduction in tax rates, reducing tax evasion opportunities by taxing all sources of income and by increasing documentation through compulsory show of tax identity in making most material transactions.
    Keywords: Taxes; Fiscal Policy; Public Finance; Tax Buoyancy; Tax Elasticity; Tax to GDP Ratio
    JEL: E62 H2 H3
    Date: 2012–04–31
  4. By: Jacob, Martin (Uppsala Center for Fiscal Studies); Södersten, Jan (Uppsala Center for Fiscal Studies)
    Abstract: This article reconsiders the role of dividend taxation and its effect on the cost of capital of small firms. Using a simple portfolio model for small open economies, we show that a decrease in dividend taxes on large companies unambiguously increases the required rate of return for small companies. A dividend tax cut for both, large and small companies may however lead to the counter-intuitive result of increasing cost of capital for small firms. For different small open economies, we further provide statistics on the correlation between the return of large and small firms that drives the counter-intuitive result. Our results suggest that mitigating payout taxes in small open economies can have ambiguous effects on the cost of capital of small, domestically owned firms. This is particularly relevant when tax reforms are designed to stimulate investments by small firms scarce in internal funds.
    Keywords: Shareholder taxation; corporate-personal tax integration; open economy; investment incentives; small firms
    JEL: H24 H25
    Date: 2012–01–30
  5. By: Mireille Chiroleu-Assouline; Mouez Fodha
    Abstract: European countries have increased their use of environmental tax instruments by designing new tax bases. But, many countries have to face the opposition of the public opinion, for fear of the distributive consequences of these environmental tax reforms. This paper sheds light on the distrib-utive consequences of environmental tax policies when households are heterogeneous. The objective is to assess whether an environmental tax reform could be Pareto improving, when the revenue of the pollution tax is recycled by a change in the labor tax properties. We show that, whatever the degree of regressivity of the environmental tax alone, it is possible to design a recycling mechanism that renders the tax reform Pareto improving, by simultaneously decreasing the average rate of the wage tax and increasing its progressivity.
    Keywords: Environmental tax reform,heterogeneity, welfare analysis, tax progressivity.
    JEL: D60 D62 E62 H23
    Date: 2012–07–16
  6. By: Roberto Machado; José Zuloeta
    Abstract: This paper estimates short-run and long-run elasticities of tax revenue with respect to GDP in eight Latin American countries using quarterly data. Taxes considered are corporate income tax (CIT), personal income tax (PIT), value-added tax (VAT), and overall taxes. Results indicate that long-run elasticities are statistically and economically larger than 1, whereas short-run elasticities appear not to be statistically different from zero in the majority of cases. Tax systems seem very elastic in Argentina, Colombia, Ecuador, Peru, and Venezuela. The CIT exhibits the largest estimated long-run elasticity in most countries. Focusing on short-run elasticities that show statistical significance, only the CIT in Colombia and the PIT in Brazil and Colombia show larger fluctuations over the business cycle than growth potential in the long run. Overall, our results indicate that tax systems in Latin America are significantly more elastic than previous estimations.
    Keywords: Economics :: Economic Development & Growth, Economics :: Production & Business Cycles, Tax revenue, Elasticities, Business cycles,
    JEL: E32 H24 H25 H29
    Date: 2012–09
  7. By: Thomas Piketty; Emmanuel Saez
    Abstract: This paper reviews recent developments in the theory of optimal labor income taxation. We emphasize connections between theory and empirical work that were initially lacking from optimal income tax theory. First, we provide historical and international background on labor income taxation and means-tested transfers. Second, we present the simple model of optimal linear taxation. Third, we consider optimal nonlinear income taxation with particular emphasis on the optimal top tax rate and the optimal profile of means-tested transfers. Fourth, we consider various extensions of the standard model including tax avoidance and income shifting, international migration, models with rent-seeking, relative income concerns, the treatment of couples and children, and non-cash transfers. Finally, we discuss limitations of the standard utilitarian approach and briefly review alternatives. In all cases, we use the simplest possible models and show how optimal tax formulas can be derived and expressed in terms of sufficient statistics that include social marginal welfare weights capturing society's value for redistribution, behavioral elasticities capturing the efficiency costs of taxation, as well as parameters of the earnings distribution. We also emphasize connections between actual practice and the predictions from theory, and in particular the limitations of both theory and empirical work in settling the political debate on optimal labor income taxation and transfers.
    JEL: H21
    Date: 2012–11
  8. By: Arnaldur Sölvi Kristjánsson (University of Iceland and Toulouse School of Economics); Peter J. Lambert (University of Oregon)
    Abstract: The structural progression of an income tax schedule measures how liabilities change with changes in the income being taxed. This paper extends the measurement of structural progression to a pure-form dual income tax (DIT) system, which combines progressive taxation of labour income with proportional taxation of income from capital at a lower rate. Firm links are obtained between structural progression and revenue responsiveness for a DIT, and we demonstrate how structural progression measures can aid in redistributive analysis, using Nordic data to highlight problems which can stem from pretax distributional changes. We conclude with an assessment of the new theoretical and empirical work that is now required, much of which will be data driven.
    Keywords: personal income tax, dual income tax, structural progression.
    JEL: D31 D63 H23
    Date: 2012–10
  9. By: Harry Huizinga; Johannes Voget; Wolf Wagner
    Abstract: This paper examines empirically how international taxation affects the volume and pricing of cross-border banking activities for a sample of banks in 38 countries over the 1998-2008 period. International double taxation of foreign-source bank income is found to reduce banking-sector FDI. Furthermore, such taxation is almost fully passed on into higher interest margins charged abroad. These results imply that international double taxation distorts the activities of international banks, and that the incidence of international double taxation of banks is on bank customers in the foreign subsidiary country. Our analysis informs the debate about additional taxation of the financial sector that has emerged in the wake of the recent financial crisis.
    JEL: F23 G21 H25
    Date: 2012–10

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