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on Accounting and Auditing |
| By: | Paolo Brunori (University of Bari, Italy); Flaviana Palmisano (University of Luxembourg); Vito Peragine (University of Bari, Italy) |
| Abstract: | This paper addresses the problem of the normative evaluation of income tax systems and income tax reforms. While most of the existing criteria, framed in the utilitarian tradition, are uniquely based on information about individual incomes, this paper, building upon the opportunity egalitarian theory, proposes new equity criteria which take into account also the socio-economic characteristics of individuals. Suitable dominance conditions that can be used to rank alternative tax systems are derived by means of an axiomatic approach. Moreover, the theoretical results are used to assess the redistributive effects of an hypothetical tax reform in Romania through a microsimulation analysis. |
| Keywords: | Income inequality, inequality of opportunity, tax reforms, microsimulation, progressivity, horizontal equity. |
| JEL: | D63 E24 O15 O40 |
| Date: | 2014–11 |
| URL: | http://d.repec.org/n?u=RePEc:inq:inqwps:ecineq2014-348&r=acc |
| By: | Evers, Lisa; Spengel, Christoph |
| Abstract: | Tax planning with intangibles has become one of the most popular and most vividly debated topics in international taxation. We incorporate various intellectual property (IP) tax planning models into forward-looking measures of effective tax rates, namely the disposal of intangibles to low-tax subsidiaries, intra-group licensing arrangements, and intra-group contract R&D. In doing so, we draw upon the methodology put forward by Devereux and Griffith and amend this model by considering a research & development (R&D) investment which is carried out by a parent company, whereby the resulting intangible is exploited by a foreign subsidiary. We point out analytically under which conditions IP tax planning achieves the objective of reducing the effective average tax rate of the group. We find that the disposal of intangibles to low-tax subsidiaries does not achieve this tax planning objective, if the true value of the asset is subject to tax upon the disposal. We show to what extent the parent must understate the value of the intangible in order to reduce the group's tax burden. We furthermore point out that contract R&D may generally achieve a significant lower effective tax burden. We present cost of capital and effect average tax rates to illustrate these findings. |
| Keywords: | corporate taxation,effective tax rate,tax planning,profit shifting,transfer pricing,intellectual property,intangible assets,contract R&D |
| JEL: | F23 H25 H32 H87 K34 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:14111&r=acc |
| By: | Cebula, Richard |
| Abstract: | This empirical study seeks to identify determinants of the underground economy in the U.S. in the form of aggregate federal personal income tax evasion over the period 1975-2008, with a specific focus upon the net impact of higher federal income tax rates on personal income tax evasion. In this study, we use the most recent data available on aggregate personal income tax evasion, data that are derived from the General Currency Ratio Model and measured in the form of the ratio of unreported AGI to reported AGI. Most other studies of federal income tax evasion for the U.S. do not use data this current. It is found that the impact of increases in the federal income tax rate on aggregate personal income tax evasion may, on balance, be ambiguous, possibly suggesting that the income effect is negative and outweighs the positive substitution effect for the representative taxpayer. It is also found that the degree of aggregate federal personal income tax evasion may be an increasing function of the percentage of federal personal income tax returns characterized by itemized deductions and a decreasing function of the Tax Reform Act of 1986 (during the first two years of implementation), the ratio of the tax free interest rate yield on high grade municipals to the interest rate yield on ten year Treasury notes, and higher audit rates of filed federal income tax returns (as a measure of risk from tax evasion) by IRS personnel. Finally, unpopular wars may provide a secondary benefit for and therefore act as an inducement for greater tax evasion. |
| Keywords: | income tax evasion; income tax rates; income effect; substitution effect |
| JEL: | D12 H24 H26 H31 |
| Date: | 2013–10–27 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:60840&r=acc |
| By: | A. Bozio; D. Irac; L. Py |
| Abstract: | This paper presents an ex post evaluation of the 2008 reform of the French research tax credit. The tax scheme was massively overhauled, with a switch to a pure volume-based design, leading to a large increase in the number of firms applying and an important increase in the cost of the scheme. Given the timing and the characteristics of the reform, measuring its causal impact is challenging. We have relied on four unique sources of data – R&D surveys, administrative tax data, firm characteristics and patent datasets – to assess how French firms have reacted to these changes in incentives. Our empirical strategies rest on combining difference in differences with matching methods and taking advantage of the particular way the 2008 reform has affected incentives to invest in R&D. Our results suggest a positive effect of the 2008 reform on R&D at both the intensive margin and extensive margin, but a possible lower impact on innovation than could have been expected. |
| Keywords: | tax credit, evaluation, R&D, innovation. |
| JEL: | C23 H25 O32 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:bfr:banfra:532&r=acc |
| By: | Voloshyn, Ihor |
| Abstract: | This paper examines ways of overcoming inconsistencies between IFRS and modern concepts of credit risk management, namely, expected loss model and risk-adjusted loan pricing. Also, it is considered an issue of acceptable levels of concentration risk in bank credit portfolio. |
| Keywords: | risk management, credit risk, incurred loss model, expected loss model, impairment, loan loss provision, allowance, loan, Basel, unexpected losses, capital, credit spread, interest income, financial standard, accounting standard |
| JEL: | G21 |
| Date: | 2014–12–29 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:61004&r=acc |
| By: | Tatiana Cesaroni (Bank of Italy); Roberta De Santis (ISTAT) |
| Abstract: | The neoclassical and OCA theories predict that higher capital market openness, providing better risk sharing opportunities, should enable catching up and convergence among countries. However, starting from ‘90s, Current Account (CA) dispersions within European Union (EU) member States have been progressively increasing. To shed light on this issue this paper investigates whether financial integration played a role in determining the so called Eurozone CA “core-periphery dualism”. The analysis considers two samples of 22 OECD and 15 EU countries, three time horizons corresponding to various European integration steps, different control variables and several panel econometric methods. The results suggest that within OECD and EU groups, financial integration significantly contributed to explain CA dispersion. Moreover, financial integration seems to have negatively influenced the CA balance in the peripheral countries especially in the post EMU period. |
| Keywords: | current accounts imbalances, financial integration, EMU, core-periphery countries, panel econometric models |
| JEL: | F36 F43 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:lui:lleewp:14114&r=acc |
| By: | International Monetary Fund. Fiscal Affairs Dept. |
| Keywords: | Fiscal transparency;Government accounting;Reports on the Observance of Standards and Codes;Technical Assistance;Iceland; |
| Date: | 2014–12–30 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfscr:14/353&r=acc |
| By: | Borio, Claudio (Bank of International Settlements); James, Harold (Princeton University); Shin, Hyun Song (Bank of International Settlements) |
| Abstract: | In analysing the performance of the international monetary and financial system (IMFS), too much attention has been paid to the current account and far too little to the capital account. This is true of both formal analytical models and historical narratives. This approach may be reasonable when financial markets are highly segmented. But it is badly inadequate when they are closely integrated, as they have been most of the time since at least the second half of the 19th century. Zeroing on the capital account shifts the focus from the goods markets to asset markets and balance sheets. Seen through this lens, the IMFS looks quite different. Its main weakness is its propensity to amplify financial surges and collapses that generate costly financial crises – its “excess financial elasticity”. And assessing the vulnerabilities it hides requires going beyond the residence/non-resident distinction that underpins the balance of payments to look at the consolidated balance sheets of the decision units that straddle national borders, be these banks or non-financial companies. We illustrate these points by revisiting two defining historical phases in which financial meltdowns figured prominently, the interwar years and the more recent Great Financial Crisis. |
| JEL: | E40 E43 E44 E50 E52 F30 F40 |
| Date: | 2014–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:fip:feddgw:204&r=acc |