nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2013‒12‒15
seven papers chosen by
Alexander Harin
Modern University for the Humanities

  1. Investigating the determinants of experts' tax aggressiveness: Experience and personality traits By Blaufus, Kay; Zinowsky, Tim
  2. Are closely-held firms tax shelters? By Annette Alstadsæter; Wojciech Kopczuk; Kjetil Telle
  3. How will the court decide? Tax experts and the estimation of tax risk By Blaufus, Kay; Bob, Jonathan; Trinks, Matthias
  4. The effect of tax enforcement on tax elasticities: Evidence from charitable contributions in France By Gabrielle Fack; Camille Landais
  5. The peculiar distributional character of the Greek taxation system (1995‐2008) and the reform that never took place By Ioannidis, Yiorgos
  6. The Great Recession, tax policy, and the future of charity in America By Arthur C. Brooks
  7. Measuring Firm-Level Productivity Convergence in the UK: The Role of Taxation and R&D Investment By Ioannis Bournakis; Sushanta Mallick; David Kernohan; Dimitris A.Tsouknidis

  1. By: Blaufus, Kay; Zinowsky, Tim
    Abstract: This study analyzes how the Big Five personality traits and professional experience affect the aggressiveness of tax preparers' recommendations. To this aim, we conduct a survey among tax professionals of a Big Four accounting firm and tax students. Using treatment-effects regressions, we find that personality traits have direct and indirect effects on tax aggressiveness. The indirect effects are due to a selection effect. Personality traits affect the decision to remain in the organizational environment of the Big Four accounting firm, and the experience in this firm is significantly related to tax aggressiveness. Our data suggest that enhancing work experience at the accounting firm leads to lower tax aggressiveness and that the organizational culture appears to be an important determinant of tax aggressiveness. Moreover, we provide evidence that the danger of potential reputation losses reduces subjects' tax aggressiveness regardless of whether the subject is highly experienced. --
    Keywords: tax preparers,tax aggressiveness,experience,personality traits,Big Five,reputation loss
    JEL: M40 M41 H25 H26
    Date: 2013
  2. By: Annette Alstadsæter; Wojciech Kopczuk; Kjetil Telle (Statistics Norway)
    Abstract: In 2004 Norwegian authorities announced a reform introducing dividend taxation for personal (but not corporate) owners to take effect starting in 2006. This change provided incentives to maximize dividends in 2004 and 2005, and to retain earnings in the following years. Using Norwegian registry data that cover the universe of non-publicly traded firms, we find that dividend payments responded very strongly to the anticipated reform, but also that much of the response was compensated by reinjecting shareholder equity in the same firms. On the other hand, following the reform firms began to retain earnings. While all categories of assets grow, the increase in durable assets categories that include equipment, machinery, company cars, planes and boats, is particularly striking. We find that personally owned firms and those that pursued aggressive dividend maximization policy in anticipation of the reform exhibit lower profits and economic activity in its aftermath, but retain earnings and accumulated assets at comparable or faster rate than others. The differential effect on assets is concentrated in financial (a potential substitute for private saving) and durable (a potential substitute for private consumption) asset categories. We interpret these results as indicating both the existence of real tax responses and supportive of the notion that in the presence of dividend taxation closely-held firms partially serve as tax shelters.
    Keywords: Tax; Tax shelter; Firm
    JEL: H25 H32 H26
    Date: 2013–11
  3. By: Blaufus, Kay; Bob, Jonathan; Trinks, Matthias
    Abstract: Tax accounting and tax law concern the probability thresholds that can require the taxpayer to estimate the likelihood that a tax position would be upheld by a court. Tax complexity and the consequent ambiguity results in a reliance by most taxpayers on a tax expert estimate of this likelihood. This study examines whether the tax experts are able to accurately forecast the outcome of tax court decisions and compares tax expert predictions to those of laymen. Our results reveal no significant differences with respect to the forecasting performance of professional tax advisors and laymen. Moreover, the tax advisors exhibit a significantly higher level of overconfidence compared to laymen and the degree of overconfidence increases with professional experience. A comparison of two groups of tax experts, tax advisors and revenue agents demonstrates that the tax advisors exhibit the highest level of overconfidence and form stronger appeal recommendations that indicate a type of advisor bias. --
    Keywords: tax risk,overconfidence,client advocacy,tax controversy,forecasting
    JEL: M40 K20 H20
    Date: 2013
  4. By: Gabrielle Fack; Camille Landais
    Abstract: Optimal tax formulas expressed in "sufficient statistics" are usually calibrated under the assumption that the relevant tax elasticities are unaffected by other available policy instruments. In practice though, tax authorities have many more instruments than the mere tax rates and tax elasticities are functions of all these policy instruments. In this paper we provide evidence that tax elasticities are extremely sensitive to a particular policy instrument: the level of tax enforcement. We exploit a natural experiment that took place in France in 1983, when the tax administration tightened the requirements to claim charitable deductions. The reform led to a substantial drop in the amount of contributions reported to the administration, which can be credibly attributed to overreporting of charitable contributions before the reform, rather than to a real change in giving behaviours. We show that the reform was also associated with a substantial decline in the absolute value of the elasticity of reported contributions. This finding allows us to partially identify the elasticity of overreporting contributions, which is shown to be large and inferior to -2 in the lax enforcement regime. We further show using bunching of taxpayers at kink-points of the tax schedule that the elasticity of taxable income also experienced a significant decline after the reform. Our results suggest that optimizing the tax rate for a given tax elasticity when other policy instruments are not optimized can lead to misleading conclusions when tax authorities have another instrument that could set the tax elasticity itself at its optimal level as in Kopczuk and Slemrod [2002].
    Date: 2013–11
  5. By: Ioannidis, Yiorgos
    Abstract: The period 1995‐2008 is a period of fundamental transformation for the Greek economy. The dominance of services in the GDP and the decline of manufacturing and agriculture, the expansion of wage earners and the decline of self‐employment, the strengthening of large companies versus the smaller ones, the massive influx of immigrants and women in the labour market, the economic expansion to the Balkans and Turkey, the liberalization of the financial system, the euro, are all aspects of a transformation that occurred during that period. So, at a first glance it seems to be a paradox that the structure of the taxation system and its results only changed marginally. The explanation of this paradox lies in the peculiar distributive (as opposed to redistributive)character of the taxation system. Namely, the fact that the government interventions during the period 1995‐2008 resulted in the distribution of the surplus generated from the robust growth to business elites and specific social groups, instead of using this surplus to fund a reform of the taxation system aiming at a fairer distribution of the tax burden. Unfortunately, the combination of the tax agenda of the conservative party in government (Nea Dimocratia) along with a populist rhetoric of the opposition did not allow the promotion of the so needed tax reform.
    Keywords: taxation, political economy, tax-evation
    JEL: E20 E60 E64
    Date: 2013
  6. By: Arthur C. Brooks (American Enterprise Institute)
    Abstract: This paper estimates the price and income elasticities of charitable giving using the 2009 Panel Study of Income Dynamics. It then considers the likely effects of the 2013 personal income tax rate increases and possible tax deduction limits currently under consideration. �
    Keywords: taxation,philanthropy,charitable giving,America's culture of philanthropy
    JEL: A H
    Date: 2013–12
  7. By: Ioannis Bournakis; Sushanta Mallick; David Kernohan; Dimitris A.Tsouknidis
    Abstract: This paper examines the direct effects of corporate tax on firm productivity along with the interaction effects of tax policy and R&D activity on productivity at firm level for over 13,062 firms during 2004-2011. Our main findings are first, that there is evidence for productivity convergence and we find that there is a positive robust relationship between R&D and firm productivity, whereas tax policy has a negative distortionary effect on TFP. Second, firms with greater export orientation do not seem to achieve much improvement in productivity, whereas the favourable productivity effect in the case of R&D-based firms suggests that if there are tax incentives in place for R&D type activity, it can promote innovation and drive productivity convergence (lagging firms closing the technology gap with those at the frontier), particularly so when there is a continued decline in overall economic activity. The results also show a significant non-linear effect of tax rate on firm-level productivity, identifying an inverse U-shaped relationship
    Keywords: Total Factor Productivity, Catch-Up, Effective Tax Rate, Firm-level Productivity Convergence, UK.
    JEL: O3 O4
    Date: 2013–11

This nep-acc issue is ©2013 by Alexander Harin. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.