nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2013‒07‒28
seven papers chosen by
Alexander Harin
Modern University for the Humanities

  1. Corporate Effective Tax Rates in Asian Countries By Masaaki Suzuki
  2. Income Taxation of U.S. Households: Facts and Parametric Estimates By Nezih Guner; Remzi Kaygusuz; Gustavo Ventura
  3. Property Tax Salience and Payment Delinquency By Bradley, Sebastien
  4. How to Enforce Value-Added Tax? The Role of Inter-Sectoral Linkages By Hoseini, M.
  5. Taxpaying response of small firms to an increased probability of audit: some evidence from Italy By Carlo Fiorio; Stefano Iacus; Alessandro Santoro
  6. Patents in the University: Priming the Pump and Crowding Out By Suzanne Scotchmer
  7. Ownership structures and R&D in Europe: the good institutional investors, the bad and ugly impatient shareholders By Olivier Brossard; Stéphanie Lavigne; Mustafa Sakinc Erdem

  1. By: Masaaki Suzuki (The Research Center for Advanced Policy Studies, Institute of Economic Research, Kyoto University)
    Abstract: This paper aims to (a) calculate Devereux and Griffith’s (2003) forward-looking effective tax rates for 12 Asian countries over a span of 30 years, (b) show the impact of tax holidays on the effective tax rate in Asian countries, and (c) empirically explore the possibility of tax competition among Asian countries. Through relevant analyses, I arrive at three key conclusions. First, while small countries with little rent in domestic markets set their effective tax rates at almost zero, large countries maintain much higher effective tax rates. Second, for countries that have generous capital allowance systems, tax holidays may lead to a rise in not only the effective marginal tax rates (EMTR), but also the effective average tax rates (EATR). Third, some Asian countries may engage in tax competition, at least over the EATR, for a limited period of time. However, while some countries have raised their effective tax rates in recent years, others have continued with tax reductions. These results indicate that the recent tax interactions among Asian countries differ from the simpler interactions seen among the European countries.
    Keywords: Corporate income tax, Effective tax rates, Tax incentives, Tax competition
    JEL: H25 H87
    Date: 2013–07
  2. By: Nezih Guner; Remzi Kaygusuz; Gustavo Ventura
    Abstract: We use micro data from the U.S. Internal Revenue Service to document how Federal Income tax liabilities vary with income, marital status and the number of dependents. We report facts on the distributions of average taxes, properties of the joint distributions of taxes paid and income, and discuss how taxes are affected by marital status and the number of children. We also provide multiple parametric estimates of tax functions for use in applied work in macroeconomics and public finance.
    Keywords: taxation, tax progressivity, households
    JEL: E62 H24 H31
    Date: 2013–07
  3. By: Bradley, Sebastien (Department of Economics & International Business LeBow College of Business Drexel University)
    Abstract: Despite only modest supporting evidence, shocks to households' personal finances are commonly cited as one of the principal causes of homeowner defaults. In this paper, I investigate the extent to which different component sources of annual variation in property tax obligations influence the probability and magnitude of property tax delinquency are likely precursor to mortgage default. Under Michigan's system of property tax limitations, rational homeowners should readily anticipate changes in tax liability, making such changes an unlikely cause of delinquency, regardless of the underlying source. Looking at tax payment records for the city of Ann Arbor, Michigan for the period 2006-2009, I instead find that a household's probability of making late payments, the tardiness of their payments, the amount by which they underpay, or the amount of their resulting interest penalties are all generally greater when changes in property taxes arise through less salient features of the Michigan tax system. This suggests that homeowners, especially new homebuyers, do not rationally anticipate their future tax bills and may instead bear a heavy cost for their inattention to the property tax system.
    Keywords: property taxes; delinquency; default; tax salience; limited attention
    JEL: D14 D84 H21 H24 H31
    Date: 2012–11–01
  4. By: Hoseini, M. (Tilburg University, Center for Economic Research)
    Abstract: Abstract: This paper models and empirically tests a self-enforcing feature of the value added tax (VAT) which is absent in the theory: An incentive that makes formal traders buy from suppliers who pay VAT too. In addition, it explores how the government can deploy this feature to enforce VAT more efficiently by reallocating the enforcement spendings among different sectors. The results suggest that the government should identify the non-compliant firms more strictly in the backwardly linked sectors {which buy their inputs from the others{ and focus on revealing within-firm information. In contrast, in forwardly linked industries, the government should zoom on double checking the transaction records with the corresponding input credit claims. Empirical evidence from Indian service sector enterprises strongly confirms the existence of VAT self-enforcement effect, even in the absence of government punishments.
    Keywords: Value-added tax;Informality;Tax enforcement;Linkage analysis.
    JEL: H26
    Date: 2013
  5. By: Carlo Fiorio; Stefano Iacus; Alessandro Santoro
    Abstract: Income tax evasion by small rms has been seldom investigated mostly because of lack of data. In this paper we use a large data set produced by the Italian Revenue Agency for this project to analyse a recent policy to contrast business income tax evasion. Since 1998 Italy has adopted a method to audit small businesses (Studi di Settore), which denes the probability of a tax audit based on presumptive and reported levels of sales. In 2007 a letter campaign was implemented by the Italian Revenue Agency aimed at reducing manipulation of reports by threatening that if the "anomaly" was repeated with the 2008 tax declaration, the probability of a thorough tax audit would have drastically increased. By using dierence in dierence with matching methods on a sample of about 50,000 treated firms and 95,000 controls, we find that the letter campaign had a positive and statistically signicant average effect on treated firms. A cost-benet analysis of the policy suggests that the letter campaign generated a net increase of revenues of about 140 million euros.
    Keywords: Business Taxation, Tax Compliance, Coarsened Exact Matching, Studi di Settore
    JEL: H26 H25 C13
    Date: 2013–07
  6. By: Suzanne Scotchmer
    Abstract: The Bayh-Dole Act allows universities to exploit patents on their federally sponsored research. University laboratories therefore have two sources of funds: direct grants from sponsors and income from licensing. Tax credits for private R&D also contribute, because they increase the profitability of licensing. Because Bayh-Dole profits are a source of funds, the question arises how subsidies and Bayh-Dole profits fit together. I show that subsidies to the university can either "prime the pump" for spending out of Bayh-Dole funds, or can crowd it out. Because of crowding out, if the sponsor wants to increase university spending beyond the university's own target, it will end up funding the entire research bill, just as if there were no profit opportunities under the Bayh-Dole Act. A subsidy system that requires university matching can mitigate this problem.
    JEL: K0 L00 O34
    Date: 2013–07
  7. By: Olivier Brossard (LEREPS - Laboratoire d'Etude et de Recherche sur l'Economie, les Politiques et les Systèmes Sociaux - Université des Sciences Sociales - Toulouse I : EA4212 - École Nationale de Formation Agronomique - ENFA - Institut d'Études Politiques [IEP] - Toulouse - Université Toulouse le Mirail - Toulouse II); Stéphanie Lavigne (LEREPS - Laboratoire d'Etude et de Recherche sur l'Economie, les Politiques et les Systèmes Sociaux - Université des Sciences Sociales - Toulouse I : EA4212 - École Nationale de Formation Agronomique - ENFA - Institut d'Études Politiques [IEP] - Toulouse - Université Toulouse le Mirail - Toulouse II); Mustafa Sakinc Erdem (GREThA - Groupe de Recherche en Economie Théorique et Appliquée - CNRS : UMR5113 - Université Montesquieu - Bordeaux IV)
    Abstract: This study examines the relationship between ownership structures in large European companies and their innovative activity in terms of R&D spending. The analysis is performed on a sample of 324 large innovative companies over 8 years. Contrary to the view that institutional investors can have a negative influence on R&D spending, we report a positive impact of these investors. Our study also tests the impact of 'impatient' institutional investors and provides evidence of their negative influence on R&D spending.
    Keywords: ownership structures; institutional ownership; innovation; R&D intensity
    Date: 2013

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