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on Accounting and Auditing |
| By: | Richard V. Burkhauser (Department of Policy Analysis and Management, Cornell University; and Melbourne Institute of Applied Economic and Social Research, The University of Melbourne); Markus H. Hahn (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne); Roger Wilkins (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne) |
| Abstract: | Atkinson, Piketty, and Saez (2011) survey an important new literature using income taxbased data to measure the share of income held by top income groups. But changes in tax legislation that expand the tax base to include income sources (e.g. capital gains, dividends, etc.) disproportionately held by these groups will conflate such an expansion with an increase in the share of income they hold. We provide a cautionary tale from Australia of how comprehensive tax reform legislation in 1985 substantially altered Australian top income series, especially those that do not separate taxable realized capital gains from other taxable income. |
| Keywords: | Top incomes, income inequality, personal income, tax-based data |
| JEL: | D3 H2 |
| Date: | 2013–06 |
| URL: | http://d.repec.org/n?u=RePEc:iae:iaewps:wp2013n24&r=acc |
| By: | Baskaran, Thushyanthan; Lopes da Fonseca, Mariana |
| Abstract: | We survey the theoretical and empirical literature on local and international tax competition in Economics. Based on this survey, we discuss whether EU countries should harmonize tax policies to prevent a race to the bottom. Much of the evidence suggests that tax competition does not lead to significant reductions in tax revenues. Therefore, we conclude that tax coordination is in all likelihood unnecessary to prevent inefficiently low levels of taxation in the EU. But since the evidence against adverse effects of tax competition is not unambiguous, we also discuss whether intergovernmental transfers might be a less invasive means than outright tax harmonization to prevent a race to the bottom. -- |
| Keywords: | Tax competition,Tax coordination,European Union,Fiscal federalism |
| JEL: | F59 H26 H77 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:cegedp:163&r=acc |
| By: | Fuest, Clemens; Peichl, Andreas; Siegloch, Sebastian |
| 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 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:13039&r=acc |
| By: | Dina Pomeranz |
| Abstract: | Tax evasion generates billions of dollars of losses in government revenue and creates large distortions, especially in developing countries. Claims that the VAT facilitates tax enforcement by generating paper trails on transactions between firms have contributed to widespread VAT adoption worldwide, but there is little empirical evidence about this mechanism. This paper analyzes the role of third party information for VAT enforcement through two randomized experiments among over 400,000 Chilean firms. Announcing additional monitoring has less impact on transactions that are subject to a paper trail, indicating the paper trail's preventive deterrence effect. Tax enforcement leads to strong spillovers up the VAT chain, increasing compliance by firms' suppliers. These findings confirm that when evasion is taken into account, significant differences emerge between otherwise equivalent forms of taxation. |
| JEL: | H25 H26 O17 O23 |
| Date: | 2013–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:19199&r=acc |
| By: | Castellacci, Fulvio; Lie, Christine |
| Abstract: | This paper presents a survey of the micro-econometric literature on the effects of R&D tax credits on firms’ innovation activities. We focus on one specific aspect that has not received sufficient attention in previous research: the sectoral dimension. Our meta-regression analysis (MRA) sets up a new database collecting a large number of firm-level studies on the effects of R&D tax credits and investigates the factors that may explain differences in the estimated effects that are reported in the literature. The main result of the MRA analysis is indeed that sectors matter. Micro-econometric studies that have focused on a sub-sample of high-tech industries have on average obtained a smaller estimated effect of R&D tax credits. The paper proposes a simple framework to investigate why the effects of R&D tax credits vary across sectors and points out new directions and hypotheses for future research. |
| Keywords: | R&D tax credits; R&D policy; sectors; meta-regression analysis |
| JEL: | H25 H32 O32 O38 |
| Date: | 2013–07 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:47937&r=acc |
| By: | Timm Bönke; Beate Jochimsen; Carsten Schröder |
| Abstract: | In many federations, fiscal equalization schemes soften fiscal imbalances across the member states. Such schemes usually imply that the member states internalize only a small fraction of the additional tax revenue from an expansion of the state-specific tax bases, while the remainder of the additional tax revenue is redistributed horizontally or vertically. We address the question as to which extent state-level jurisdictions in such a federation underexploit their tax bases. By means of a stylized model we show that the state authorities in such a federation have incentives to align the effective tax rates of their residents to the internalized fraction of marginal tax revenue. We empirically test the model using three setups: one state level exercise and two micro level exercises using administrative income-tax data in form of an OLS regression and a natural-experiments design. All setups support the results from our theoretical model. |
| Keywords: | Fiscal federalism, taxation, tax-back rate, fiscal externalities |
| JEL: | C21 H21 H77 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp1307&r=acc |
| By: | Andrea Colciago |
| Abstract: | This paper provides optimal labor and dividend income taxation in a general equilibrium model with oligopolistic competition and endogenous firms' entry. In the long run the optimal dividend income tax corrects for inefficient entry. The dividend income tax depends on the form of competition and nature of the sunk entry costs. In particular, it is higher in market structures characterized by competition in quantities with respect to those characterized by price competition. Oligopolistic competition leads to an endogenous countercyclical price markup. As a result offsetting the distortions over the business cycle requires deviations from full tax smoothing. |
| Keywords: | Firms' Entry; Market Stuctures; Market Distortions; Optimal Dividend Income Tax |
| JEL: | E62 L13 |
| Date: | 2013–06 |
| URL: | http://d.repec.org/n?u=RePEc:dnb:dnbwpp:383&r=acc |
| By: | Francis, Bill (Rensselaer Polytechnic Institute); Hasan, Iftekhar (Fordham University and Bank of Finland); Wu, Qiang (Rensselaer Polytechnic Institute) |
| Abstract: | Using the recent financial crisis as a natural quasi-experiment, we test whether and to what extent conservative accounting affects shareholder value. We find that there is significantly positive and economically meaningful relation between conservatism and firm stock performance during the current crisis. The result holds for alternative measures of conservatism and is validated in a series of robustness checks. We further find that the relation between conservatism and firm value is more pronounced for firms with weaker corporate governance or higher information asymmetry. Overall, our paper complements LaFond and Watts (2008) by providing empirical evidence to their argument that conservatism is an efficient governance mechanism to mitigate information risk and control for agency problems, and that shareholders benefit from it. |
| Keywords: | accounting conservatism; shareholder value; financial crisis |
| JEL: | G01 M41 M48 |
| Date: | 2013–05–20 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:bofrdp:2013_008&r=acc |
| By: | Arjan Ruijs (PBL Netherlands Environmental Assessment Agency); Herman Vollebergh (PBL Netherlands Environmental Assessment Agency, CentER and Tilburg Sustainability Centre, Tilburg University) |
| Abstract: | Since 1997 the Netherlands has a tax allowance scheme introduced to promote investments in energy saving technologies and sustainable energy production. This Energy Investment Tax Allowance (EIA in Dutch) reduces up-front investment costs for firms investing in the newest energy saving and sustainable energy technologies. The basic design of the EIA has remained the same over the past 15 years. Firms investing in technologies listed in the annually updated ‘Energy List’ may deduct some of the investment costs from their taxable profits. The EIA may also reduce search costs by investors to find particular technologies because of the Energy List which is used to consider eligibility for the subsidy. This Energy List contains generic technologies that meet a certain energy-saving standard or a selection of novel, but proven, technologies with a higher energy-saving potential than conventional technologies. Over the past 15 years, the use of the EIA has been affected by a number of changes, mainly due to exogenous factors, such as interactions with other policy instruments, rising oil and gas prices, and the economic crisis since 2007. Despite this turbulence and changes in government focus, the EIA is still part of the Dutch energy policy mix. Our evaluation of the EIA contains four lessons. First, the use of tax revenues to subsidise investment in energy-efficient technologies and renewable energy is not very different from using on-budget subsidies if budgetary rules require sufficient accountability of such tax expenditures. At the beginning of the scheme, a lack of accountability of tax expenditures contributed to budgetary turbulence. A number of budget overruns in later periods were not related to budget accountability issues, but to changes outside the EIA. Second, incentive compatibility problems of the EIA are of concern but seem to be manageable. The main weakness of the tax allowance is the difficulty to prevent free-riders from receiving subsidies, even though subsidy effectiveness has improved considerably over the years. Third, the use of a dynamic technology list makes the regulation flexible, allowing policy to refocus and apply tighter standards if necessary. The list also reduces the information asymmetry between supply and demand of new technologies and helps suppliers of energy-saving or sustainable energy technologies to overcome the well-known ‘valley of death’. Finally, the design of a subsidy scheme should pay sufficient attention to the likely interaction with other policy instruments, in particular other subsidy schemes aimed at complementary objectives. The turbulence with the EIA over the 2001–2007 period was mainly caused by fluctuations in the application of other instruments. |
| Keywords: | Energy Efficiency, Renewable Energy, Investment, Tax, Tax Preference, Policy Evaluation |
| JEL: | H23 H25 H32 O33 Q48 |
| Date: | 2013–06 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2013.56&r=acc |