nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2013‒05‒19
five papers chosen by
Alexander Harin
Modern University for the Humanities

  1. Capital Gains Taxation and the Cost of Capital: Evidence from Unanticipated Cross-Border Transfers of Tax Bases By Harry Huizinga; Johannes Voget; Wolf Wagner
  2. Families, Taxes and the Welfare System By Simpson, Nicole B.
  3. Do Higher Corporate Taxes Reduce Wages? Micro Evidence from Germany By Fuest, Clemens; Peichl, Andreas; Siegloch, Sebastian
  4. Tax Rates as Strategic Substitutes By Ruud A. de Mooij; Hendrik Vrijburg
  5. Yardstick Competition among Portuguese Municipalities: The Case of Urban Property Tax (IMI) By José da Silva Costa; Armindo Cravalho

  1. By: Harry Huizinga (Tilburg University, and CEPR); Johannes Voget (University of Mannheim, Oxford University Centre for Business Taxation,CentER Tilburg University); Wolf Wagner (Tilburg University, Duisenberg School of Finance)
    Abstract: In a cross-border takeover, the tax base associated with future capital gains is transferred from target shareholders to acquirer shareholders. Crosscountry differences in capital gains tax rates enable us to estimate the discount in target valuation on account of future capital gains. A one percentage point increase in the capital gains tax rate reduces the value of equity by 0.225%. The implied average effective tax rate on capital gains is 7% and it raises the cost of capital by 5.3% of its no-tax level. This indicates that capital gains taxation is a significant cost to firms when issuing new equity.
    Keywords: Capital gains taxation, Cost of capital, International takeovers
    JEL: G32 G34 H25
    Date: 2012–09–27
  2. By: Simpson, Nicole B. (Colgate University)
    Abstract: In this paper, I will describe in detail both the Earned Income Tax Credit and the Child Tax Credit in the U.S., including their origins, their structure, and the effects they have on the labor market and family formation. I will then discuss the macroeconomic implications of U.S. welfare reform, and then conclude by analyzing the effectiveness of the U.S. safety net (broadly defined) during the Great Recession of 2007-2008.
    Keywords: taxes, welfare, families, EITC, child tax credit, TANF
    JEL: D1 H24 H53
    Date: 2013–04
  3. By: Fuest, Clemens (ZEW Mannheim); Peichl, Andreas (IZA); Siegloch, Sebastian (IZA)
    Abstract: Because of endogeneity problems very few studies have been able to identify the incidence of corporate taxes on wages. We circumvent these problems by using an 11-year panel of data on 11,441 German municipalities' tax rates, 8 percent of which change each year, linked to administrative matched employer-employee data. Consistent with our theoretical model, we find a negative effect of corporate taxation on wages: a 1 euro increase in tax liabilities yields a 77 cent decrease in the wage bill. The direct wage effect, arising in a collective bargaining context, dominates, while the conventional indirect wage effect through reduced investment is empirically small due to regional labor mobility. High and medium-skilled workers, who arguably extract higher rents in collective agreements, bear a larger share of the corporate tax burden.
    Keywords: business tax, wage incidence, administrative data, local taxation
    JEL: H2 H7 J3
    Date: 2013–05
  4. By: Ruud A. de Mooij (IMF); Hendrik Vrijburg (Erasmus University Rotterdam)
    Abstract: This paper analytically derives the conditions under which the slope of the tax reaction function is negative in a classical tax competition model. If countries maximize welfare, we show that a negative slope (reflecting strategic substitutability) occurs under relatively mild conditions. Simulations suggest that strategic substitutability occurs under plausible parameter configurations. The strategic tax response is crucial for understanding tax competition games, as well as for assessing the welfare effects of partial tax unions (whereby a subset of countries coordinate their tax rates). Indeed, contrary to earlier findings that have assumed strategic complementarity in tax rates, we show that partial tax unions might reduce welfare under strategic substitutability.
    Keywords: Strategic Substitutes, Asymmetry, Strategic Tax Response, Tax Coordination
    JEL: E62 F21 H25 H77
    Date: 2012–10–02
  5. By: José da Silva Costa (Faculdade de Economia, Universidade do Porto.); Armindo Cravalho (Faculdade de Economia, Universidade do Porto.)
    Abstract: In this paper we gather empirical evidence on the existence of strategic interaction among Portuguese municipal executives when they set rates of property tax and in particular if we are in the presence of yardstick competition. For that purpose, we adopted the assumption of geographic interaction among Portuguese municipalities when setting rates of property tax. We have estimated, for evaluated and non-evaluated urban property, spatial lag models with two spatial dependency regimes (municipalities with and without a solid majority) and cross-section fixed effects coefficients. The results provide strong empirical evidence on the existence of strategic interaction among Portuguese municipalities when setting rates of municipal taxes and on the yardstick hypothesis.
    Keywords: Yarstick competition; Local Governments; Portugal.
    JEL: H71 H73
    Date: 2013–05

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