nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2013‒08‒31
seven papers chosen by
Alexander Harin
Modern University for the Humanities

  1. Capital income taxation: Reframing the debate By Alan D. Viard
  2. Effects of supervision on tax compliance: Evidence from a field experiment in Austria By Katharina Gangl; Benno Torgler; Erich Kirchler; Eva Hofmann
  3. Tax Competition and Double Tax Treaties with Mergers and Acquisitions By Siggelkow, Benjamin Florian
  4. Effective Personal Tax Rates on Marginal Skills Investments in OECD Countries: A New Methodology By Bert Brys; Carolina Torres
  5. The distributional effects of taxes and transfers under alternative income concepts: the importance of three ‘I’s By Figari, Francesco; Paulus, Alari
  6. Israeli corporate tax policy: A pro-growth system at risk By Alex Brill
  7. Capital mobility, imperfect labour markets, and the provision of public goods By Pauser, Johannes

  1. By: Alan D. Viard (American Enterprise Institute)
    Abstract: Opponents of capital income taxation must reframe the policy debate by explaining the economic disadvantages of capital income taxes and proposing alternative budgetary measures that maintain tax fairness.
    Keywords: corporate taxation,capital income taxes,AEI on Campus,taxation
    JEL: A H
    Date: 2013–07
  2. By: Katharina Gangl; Benno Torgler; Erich Kirchler; Eva Hofmann
    Abstract: The tax compliance literature has mainly focused on individual tax evasion rather than firm tax evasion. In general, there is a lack of field experiments on the topic, and measuring tax compliance is challenging. To address this shortcoming in the literature, we conduct a field experiment on firm tax compliance looking at newly founded firms. As a novelty we explore how firms react to closer supervision by the tax administration, looking at timely paying which has no measurement biases. Interestingly, we observe a crowding-out effect of supervision on timely paying of taxes. On the other hand, for those who were non-compliant, supervision reduced the tax amount that was due.
    Keywords: tax compliance; tax evasion; field experiment; deterrence; tax enforcement; supervision
    JEL: H26 C93 K42
    Date: 2013–08
  3. By: Siggelkow, Benjamin Florian
    Abstract: In a two-period tax competition model with provision of local public goods, we analyze efficiency properties of double taxation reliefs incorporating either the exemption method, the tax credit system or the full taxation after deduction system. Foreign direct investments are presumed to be one-way and characterized by long-term mergers and acquisitions. We find that in case of (i) tax revenue maximization the exemption method implies inefficiently low tax rates, whereas the full taxation after deduction system leads to inefficiently low / efficient / inefficiently high tax rates. In case of (ii) welfare maximization each of these tax rules can be efficient. The (limited) tax credit system, however, is shown to always result in inefficiently low / inefficiently high tax rates. A numerical example reveals that no tax regime per se entails efficiency. In case of (i), a ranking of tax systems subject to the Pareto criterion is shown to depend on the parameters of the production function. Regarding (ii) the exemption method is preferable as it is proven to be the least inefficient tax regime.
    Keywords: tax competition, double taxation relief, tax rules, profit taxation, mergers and acquisitions
    JEL: H21 H73 H87
    Date: 2013
  4. By: Bert Brys; Carolina Torres
    Abstract: This paper presents a new methodology to calculate effective tax rates on the marginal return on an investment in skills within a discounted cash-flow investment framework. This approach takes into account costs including forgone labour earnings and the direct costs of skills formation, as well as the earnings premium and the return of an alternative investment in capital income. The earnings premium necessary to pursue a skills investment is calculated endogenously. This framework can be used to analyse the financial incentives to invest in skills and the impact of different policies for financing post-secondary education and/or professional training. The paper looks in particular at the effects of personal taxes (possibly net of benefits received) on incentives to acquire skills by estimating the effective tax rate on the return on a marginal skill investment – that is, one where the resulting increase in earnings is just enough to make the investment financially worthwhile; this “margin” can span multiple years. This approach may be helpful to policymakers in assessing the impact of tax progressivity and/ or the withdrawal of benefits and the case for tax breaks for postsecondary education and training, and could be extended to compare the impact of tax breaks relative to other policy instruments to stimulate skills investments. The paper includes some illustrative calculations in order to demonstrate how to apply the methodology within the OECD's Taxing Wages framework for all OECD countries, which is left for follow-up work.<P>Calcul des taux effectifs de l'impôt sur le revenu des personnes physiques applicables aux investissements marginaux dans les compétences dans les pays de l'OCDE : Nouvelle méthodologie<BR>Ce document présente une nouvelle méthodologie pour calculer les taux effectifs de l'impôt sur le rendement marginal d'un investissement dans les compétences en utilisant une méthode d'actualisation des flux financiers. Cette approche prend en compte les coûts, y compris le manque à gagner en termes de revenu du travail et les coûts directs d’acquisition des compétences, ainsi que l’avantage salarial et le rendement d’un investissement alternatif dans un revenu du capital. L'avantage salarial nécessaire pour justifier un investissement dans les compétences est calculé de façon endogène. Ce cadre peut être utilisé pour analyser les incitations financières à investir dans les compétences et l’incidence de différentes stratégies de financement de l'enseignement postsecondaire et/ou de la formation professionnelle. Ce document examine en particulier les effets des impôts sur les personnes physiques (si possible nets des prestations reçues) sur les incitations à acquérir des compétences, en estimant le taux effectif d'imposition du rendement généré par un investissement marginal dans les compétences : l'augmentation de salaire générée par cet investissement est juste suffisante pour rendre l’investissement financièrement attractif ; cette « marge » peut s’étaler sur plusieurs années. Cette approche peut aider les responsables publics à estimer l'impact de la progressivité de l’impôt et/ou de la suppression de prestations, ainsi que l'opportunité d’allégements fiscaux en faveur de l'enseignement et de la formation postsecondaires ; elle peut également servir à comparer l'impact d'allégements fiscaux par rapport à d’autres instruments d’action visant à encourager les investissements dans les compétences. Ce document présente des exemples de calcul afin d’illustrer comment appliquer cette méthodologie dans le cadre de la publication de l’OCDE Les impôts sur les salaires pour l'ensemble des pays de l'OCDE, ce qui fera l'objet de travaux de suivi.
    Keywords: human capital, skills, personal income tax, social security contributions, effective tax rate, capital humain, cotisations de sécurité sociale, taux effectifs d’imposition, impôt sur le revenu des personnes physiques, compétences
    JEL: H21 H24
    Date: 2013–08–01
  5. By: Figari, Francesco; Paulus, Alari
    Abstract: This paper investigates how the distribution of income changes when the standard definition of disposable income is replaced by an extended income concept which takes into account the three Is: indirect taxes, imputed rent, and in-kind benefits. Second, it assesses how sensitive the distributional effects of each tax-benefit instrument are to the choice of income concept. The analysis covers three European countries (Belgium, Greece and the UK) characterised by substantially different tax-benefit systems, giving a stronger base for generalising the results. The main findings are that the overall redistributive effect of the tax-benefit systems depends heavily on the income concept considered and the differences across countries are smaller when considering the extended income distribution. Moreover, the common use of a narrower income concept, such as the disposable income, can lead to the overestimation of the redistributive effect of the cash tax-benefit instruments (in relative terms), the extent of this varying across countries, due to the size and distribution of three Is and the adoption of the needs-adjusted equivalence scale.
    Date: 2013–08–22
  6. By: Alex Brill (American Enterprise Institute)
    Abstract: A troubling tax policy trend is emerging in Israel, where once-aggressive efforts toward a competitive corporate tax rate are being reversed. The consequences in a small and open economy like Israel's are potentially dire and could extend to investors in the Israeli economy from the United States and other foreign countries.
    Keywords: israel,foreign direct investment,Corporate tax rates
    JEL: A H
    Date: 2013–06
  7. By: Pauser, Johannes (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany])
    Abstract: "This paper examines equilibrium tax rates and provision levels of public goods in an international tax competition setting with imperfect labour markets. While earlier research mainly reexamined the result of underprovision of public consumption goods in the decentralised equilibrium, this paper focuses also on the provision of public intermediate goods with different sets of policy instruments available for governments, including a labour tax. In the tax game assuming symmetric jurisdictions, public inputs may also be overprovided if unemployment is caused by a fixed wage above the competitive wage rate. In detail, overprovision of public inputs may occur if governments have a head tax only, or head and capital taxes at disposal. Using comparative static analysis, the paper investigates further the sources of the differences between governmental provision of public consumption goods and public inputs." (Author's abstract, IAB-Doku) ((en))
    Keywords: Kapitalmobilität, öffentliches Gut, Steuerpolitik, internationaler Wettbewerb, Auslandsinvestitionen, Marktunvollkommenheit, Arbeitsmarkt, Gebietskörperschaften, Lohnsteuer, Einkommensteuer, Arbeitslosigkeit, Besteuerung, Steuerbelastung, Lohnhöhe, Beschäftigungseffekte
    JEL: H21 H71 J51
    Date: 2013–08–13

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