nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2014‒04‒29
seven papers chosen by
Alexander Harin
Modern University for the Humanities

  1. Valuation and Assessment of Immovable Property By Richard Almy
  2. The Political Economy of Property Tax Reform By Enid Slack; Richard M Bird
  3. Taxation of Real Estate in Sweden from 1862 to 2010 By Stenkula, Mikael
  4. Greening the Property Tax By Nicola Brandt
  5. Implications of Recent Federal Personal Income Tax Increases for Income Tax Evasion, Tax Revenues, and Budget Deficits By Cebula, Richard; Boylan, Robert; Foley, Maggie; Isard, Douglass
  6. Does R&D increase the profit contribution of intangible assets? An exploration of European and American automotive supplierss By Stefan Lutz
  7. Levers of Corporate Governance in India: Critical Analysis through Prism of Legal Framework By Sapovadia, Vrajlal; Patel, Akash

  1. By: Richard Almy
    Abstract: This paper addresses the following questions about immovable property taxation in OECD and partner countries: What is valued? How is it valued? And who values? It draws on published information and data on property tax policy and administration in 172 countries. It focuses on value-based taxes and the features of mass valuation systems. Main system options (such as whether taxes are based on annual rental values or capital values as reflected by sales prices) are described and briefly evaluated. It notes that valuation practices frequently ignore revaluation requirements; it identifies four areas for improving valuation performance based on the experiences of leading systems.
    Keywords: taxation, taxes, tax system, immovable property tax, property tax, Land tax, real estate
    JEL: H10 H11 H20 R51
    Date: 2014–04–09
  2. By: Enid Slack; Richard M Bird
    Abstract: Property taxes are generally considered by economists to be good taxes, and many countries are being advised to increase and improve their property taxes. In practice, however, property tax reforms have often proved to be difficult to carry out successfully. This paper discusses why property taxes are particularly challenging to reform and suggests several ways in which efforts to reform this tax may become more successful in the future. After a brief introductory section on the ‘disconnect’ between the economics and the politics of property tax reform, Section 2 summarizes recent experiences in five OECD countries with property tax reform. Against this background, Section 3 sets out the key elements of a good property tax reform and Section 4 discusses several aspects of property tax reform that seem to have derailed or distorted reforms in practice. Unfortunately, some of the solutions countries have adopted to deal with such problems are themselves problematic, either because they do not really solve the problem or because they hamper rather than work towards the establishment of a good property tax. Fortunately, as Section 5 outlines, it is possible to devise strategies for property tax reform that incorporate more acceptable solutions to most problems. As Section 6 concludes, good property tax reform is not easy. But it can definitely be achieved if an appropriately designed reform package is properly introduced and implemented.
    Keywords: tax reform, political economy, property tax
    JEL: D78 H24 H25 H71
    Date: 2014–04–09
  3. By: Stenkula, Mikael (Research Institute of Industrial Economics (IFN))
    Abstract: This paper surveys the development and role of the real estate tax in Sweden between 1862 and 2010. The possibility to tax real estate has been used at both the local and state level throughout history. Its importance is difficult to assess directly due to limited data availability and the specific construction of the local tax system after 1920. The real estate tax was supposed to provide the municipalities with a stable tax base, but its importance in this role seems to have diminished over time. After the tax reform of 1990–1991 real estate tax was levied exclusively at the national level. At most, this tax contributed to no more than five percent of total central government tax revenues, and the amount raised occasionally exceeded 1 percent of GDP. In 2008, part of the tax was transformed to a “local fee”.
    Keywords: Real estate tax; Property tax; Tax reforms
    JEL: H20 N43 N44
    Date: 2014–04–14
  4. By: Nicola Brandt
    Abstract: This paper reviews the literature and policy discussions about the role of the property tax for land use. Various externalities of the development of land, such as new infrastructure needs, the loss of open space or air pollution due to longer commutes as people locate far from city centres, are not internalised fully by property taxes or other policy instruments and this is often thought to contribute to excessive land use and urban sprawl. The impact of property taxes on land use intensity and sprawl is ambiguous in theory, however, and it depends on tax design, as well as land use regulation policies and other taxes that can influence municipalities’ incentives to convert land for development. Yet, there is some evidence suggesting that higher property taxes can limit urban sprawl, in particular when the tax on land is higher than on structures, although effects are small given relatively given a limited price elasticity of land use. Various property tax design options are discussed that may help to better internalise land use related externalities.
    Keywords: land use, fiscal zoning, property tax, urban sprawl
    JEL: R14 R38 R51 R52
    Date: 2014–04–08
  5. By: Cebula, Richard; Boylan, Robert; Foley, Maggie; Isard, Douglass
    Abstract: In 2013, federal personal income tax increases were implemented in the U.S. under provisions of two federal statutes: the American Taxpayer Relief Act of 2012 and the Patient Protection and Affordable Care Act of 2010. Based on our analysis of data for the time period 1970-2008, we argue that the incentives to engage in federal personal income tax evasion have been increased as a direct consequence of the public tax-increase policies manifested in these two statutes. To demonstrate this conclusion in the present study, we first present evidence that strongly suggests that personal income tax evasion has been an increasing function of the maximum marginal federal personal income tax rate over the period 1970-2008, which constitutes the most current data currently available on aggregate personal income tax evasion. This evidence leads us then to conclude that the federal personal income tax increases implemented effectively in 2013 under provisions of the two aforementioned statutes will result in increased tax evasion behavior and hence lower tax collections. Among other things, then, this public-policy-induced increase in personal income tax evasion also implies that the federal budget deficits in coming years will be greater than projected by the CBO and various government agencies. We also find that, among other things, federal personal income tax evasion has been an increasing function of the unemployment rate. Thus, among other things, there is also evidence that continued high unemployment rates may increase tax evasion and hence the size of federal budget deficits.
    Keywords: underground economy; tax evasion; income tax increases
    JEL: H24 H26 H31 H62
    Date: 2014–04–11
  6. By: Stefan Lutz (Royal Docks Business School, University of East London)
    Abstract: Economic theory implies that research and development (R&D) efforts increase firm productivity and ultimately profits. In particular, R&D expenses lead to the development of intangible assets in the form of intellectual property (IP) and these assets command a return that increases overall profits of the firm. This hypothesis is investigated for the North American and European automotive supplier industries. Results indicate that R&D expenses in fact increase both intangible asset levels and their profit contributions. In particular, increases in the R&D expense to sales ratio lead to increases in the profit contribution of intangible assets relative to sales. This indicates that more R&D intensive IP should command higher royalty rates per sales when licensed to third parties and within multinational enterprises alike.
    Keywords: Productivity; Intellectual property; Royalties; MNE; Transfer pricing.
    JEL: D24 L20 L62 M21
    Date: 2014–02
  7. By: Sapovadia, Vrajlal; Patel, Akash
    Abstract: Corporate Governance is the relationship between corporate managers, directors and the capital providers, who save and invest their capital to earn money in form of dividend, interest or gain. Shareholders of the company appoint Board of Directors to fulfill their objectives aligned with the corporate objectives. Board of Directors appoints key managers for implementing corporate strategies. Corporate objectives are attained with the series of actions of the directors & managers. Capital & other necessary resources are provided by shareholders and other stakeholders to the company to fulfill the common objectives. It entails responsibility of corporate managers towards investors, society & environment that provides valuable resources to the corporation in achieving their objectives. Good corporate governance practices ensure that the board of directors is accountable for the pursuit of corporate objectives to enhance wealth of corporation and that the corporation itself conforms to the law and regulations in form & spirit. This paper identifies who are the levers of corporate governance and then investigates the powers of those levers, which influences the quality of corporate governance in corporate India. We critically analyze the effectiveness of Indian legal framework to ensure good corporate governance practices. The actors who can influence the quality of corporate governance are depicted in Chart-1 classified into (i) Internal: including shareholders, independent directors, audit & nomination committee and (ii) External: including auditors, Registrar of Companies, stock exchanges, Security Exchange Board of India and the Competition Commission of India.
    Keywords: Corporate Governance, Corporate Law, Company Law, SEBI, Primary Market, Secondary Market, Legal Compliance
    JEL: G3 G38 K2
    Date: 2013–11–25

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